LDN - Business

French telco Orange found guilty over workers' suicides in landmark ruling

[December 20, 2019] By Simon Carraud

PARIS (Reuters) - French telecoms group Orange <ORAN.PA> and its former CEO Didier Lombard were guilty of "moral harassment" that prompted a spate of suicides during a restructuring at the company in the late 2000s, a Paris court ruled on Friday.

The landmark ruling against the former telecoms monopoly is bound to reverberate in French boardrooms as it could pave the way for other similar collective procedures.

The court sentenced Lombard to a year in jail, of which eight months will be suspended, and a 15,000 euros ($16,700) fine. Yet since that term is under two years and as Lombard does not present a danger to society, he will not spend time behind bars under French court rules.

The traumatic episode of workers' deaths at the company in the late 2000s led to deep soul-searching over corporate culture in France.

The court found Orange guilty of the same charge, and fined it 75,000 euros ($83,200).

"In financial terms, the sentence is light, but this is the first time a French company gets a criminal conviction for moral harassment and that is very bad in terms of reputation," said a lawyer specializing in white-collar crime.

The lawyer, who declined to be named, added the ruling will be a major concern for other companies as it sets a precedent for corporate responsibility in moral harassment and employee burn-out cases.

Many individual managers have been convicted of harassment - and often fired as a result - but not companies themselves.

Orange, which in 2018 had core earnings of 3.3 billion euros ($3.66 billion), said it would not appeal the verdict.

Orange has previously acknowledged the suffering expressed by victims and recognized there may have been management errors in implementing the restructuring plan but denies there was any systemic plan or intention to harass employees.

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Didier Lombard, former CEO of France Telecom, arrives to attend the trial of French group France Telecom, which became Orange in 2013, and its former bosses for "moral harassment" at the Paris criminal court, France, May 6, 2019. REUTERS/Charles Platiau/File Photo

COMPENSATION CLAIMS

Prosecutors argued that some of the methods employed in a deep restructuring of the company, then known as France Telecom, after privatization prompted a wave of suicides.

Lombard, 77, and three other former Orange executives also accused of "moral harassment" have denied any wrongdoing and said the restructuring plan was an economic necessity.

Orange used the last day of the trial in July to offer compensation to victims and relatives of those who died. The presiding judge estimated that claims for compensation so far were about 2 million euros ($2.25 million).

The case centers around a drive by the former state monopoly to shed 22,000 jobs and redeploy another 10,000 as it adapted to competition in the private sector.

In a country where workers employed on state contracts expect jobs for life and employees in both private and public sectors enjoy strong labor law protection, unions alleged that management sought ways to encourage workers to quit or accept reassignment.

Prosecutors listed at least 18 suicides and 13 suicide attempts between April 2008 and June 2010. According to union records, one employee stabbed himself in the stomach during a staff meeting and one woman threw herself out of a window.

(Reporting by Simon Carraud, Mathieu Rosemain and Geert De Clercq; Writing by Richard Lough and Geert De Clercq; Editing by Richard Lough and Emelia Sithole-Matarise)

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