France Telecom chief executive Stephane Richard has state backing to stay in his post as long as an inquiry into fraud allegations does not prevent him from working, President Francois Hollande said on Sunday.
Richard was a top aide in the finance ministry under former president Nicolas Sarkozy when his government in 2008 awarded tycoon Bernard Tapie 285 million euros ($373 million) in damages in a legal dispute with defunct bank Credit Lyonnais.
Richard's future has been in doubt since magistrates last week said they were opening a formal investigation into his role in the award. It is due to be discussed at an executive board meeting set for 3:30 pm Paris time (1330 GMT) on Monday.
"He can stay as long as the judicial procedure allows him to remain at the helm of the company," Hollande told M6 television.
Europe's fourth-largest telecom group is 27 percent owned by the state. While its executive board has 15 members in total, sources familiar with the company's governance told Reuters last week the stance of the three state representatives on the board was likely to be decisive.
Tapie, a supporter of Sarkozy, had contested the bank's role in the 1993 sale of his stake in sports firm Adidas
Investigating judges are examining allegations that Tapie got favourable treatment because of his political ties when the government decided to take the case to arbitration instead of court.
Richard has denied any wrongdoing. IMF chief Christine Lagarde, who was finance minister and Richard's boss at the time, has the status of special witness in the investigation.
Under French law, formal investigation means there exists "serious or consistent evidence" pointing to likely implication of a suspect in a crime. It is one step closer to a trial, but a number of such investigations have been dropped without trial.
A number of other captains of French industry have pursued their jobs while under formal investigation, but commentators have pointed out that Richard's case is notable in that the state has a sizeable minority holding in his company, and that the case relates to allegations over the misuse of public funds.
A spokeswoman for France Telecom declined to comment.
French media reported on Sunday that Richard could count on votes of all three board members representing the state, as well as those of at least four other board members.
Hollande's Socialist government decided to vote in favour of Richard because he enjoyed support from labour groups and because the judicial procedure did not prevent him from travelling abroad, Le Monde said, citing unnamed sources.