French authorities on Wednesday, June 12 placed France Télécom SA Chief Executive Stéphane Richard under formal investigation for his alleged role in an arbitration ruling that gave a financial award to a prominent French businessman five years ago, prosecutors said, according to The Wall Street Journal.

Investigating magistrates have pressed preliminary charges of conspiracy to commit fraud against Richard for his alleged actions surrounding the arbitration panel and its decision to grant a €420 million ($559 million) award from the French Treasury to business tycoon Bernard Tapie, Paris prosecutors said in a statement. Richard was a senior official at the French Finance Ministry at the time of the decision.

Richard plans to appeal the move to put him under formal investigation, his lawyer, Jean-Etienne Giamarchi, said.

He said the charges "have no serious legal basis," adding that they are "grotesque and defamatory."

Magistrates had to inform Richard that he was considered a suspect in the case at a hospital, where he had been admitted early Tuesday after a day of questioning by financial police. Richard was moved to the hospital, near the Notre Dame Cathedral, "as a measure of precaution," and questioning continued there, said a spokeswoman for the Paris prosecutor's office. A personal spokesman for Richard said the executive had been fatigued after prolonged questioning.

A France Télécom spokesman said the company "took note of the decision" and said Richard would be back "at his desk" Thursday morning.

The decision to put Richard under formal investigation—if it isn't overturned on Richard's appeal—could eventually lead to formal charges, a trial and criminal penalties for the France Télécom chief. Investigating magistrates could also decide to abandon the inquiry after further digging.

It remains unclear what impact, if any, preliminary charges against Richard could have on his position as CEO of France Télécom, which is 27%-owned by the French state.