Stéphane Richard, chief executive of France Telecom, was taken into custody yesterday for questioning over his role in an arbitration process that led to a €400 million payout in 2008 to a prominent supporter of former president Nicolas Sarkozy at a time Mr Richard was a top official in the finance ministry.

A court spokeswoman said Mr Richard, who has denied any wrongdoing, was placed in custody when he arrived for a scheduled hearing on the case, which involved the settlement of a dispute between the businessman Bernard Tapie and the state entity that managed the residual assets of the failed bank Credit Lyonnais.

The arbitration, which awarded €285 million plus interest to Mr Tapie, ended a decades-long dispute in which he claimed he had been defrauded by Credit Lyonnais over the sale in the 1990s of Adidas, the sports goods company, which he previously owned.

The then-socialist opposition, which instigated the court action, claimed the arbitration process was rigged to reward Mr Tapie for his backing for Mr Sarkozy in the 2007 presidential election.

Mr Richard was director of cabinet to Christine Lagarde, now head of the International Monetary Fund and then finance minister, when the arbitration process took place.

Last month, Ms Lagarde was questioned for two days by a special court that deals with allegations of ministerial wrongdoing over her part in the case. She was not held in custody and was placed under the status of “assisted witness” – indicating a low likelihood of prosecution.

Mr Richard can be held in custody for up to 24 hour.– (Copyright The Financial Times Limited 2013)