France Telecom chief executive Stephane Richard was hospitalised for fatigue on Wednesday after two days of questioning by police in a probe of a 2008 arbitration case that resulted in a large pay-out to businessman Bernard Tapie.
Richard was a top aide to former Finance Minister Christine Lagarde in 2008 when the French government awarded Tapie 285 million euros (238 million pounds) in damages in his long battle with now-defunct bank Credit Lyonnais.
Tapie, a supporter of former president Nicolas Sarkozy, contested the bank's role in the sale of his stake in sports clothing firm Adidas in 1993.
The prosecutors in the probe will decide later on Wednesday whether to put Richard under official investigation.
"He has been in the hospital since Tuesday morning. He is tired but he is well," said Richard's lawyer Jean-Etienne Giamarchi.
Richard has denied any wrongdoing in the case.
The corruption probe has put Richard, whose contract at state-backed France Telecom is up for renewal next year, in a delicate position with the government, which owns 27 percent of the group and chooses its chief executive.
The Socialist government has not yet replaced any of the bosses of the major state-owned companies such as utilities EDF or GDF , but could move on Richard if the Tapie case is seen as preventing him from carrying out his duties.
Bruno le Roux, the leader of the Socialists in the National Assembly, said in a television interview on Wednesday that the decision should be made by France Telecom's board. Three of the 15 board members are government representatives.
"The question will be what would the impact of an investigation be on the governance of the group," said the lawmaker. "I think it would be difficult and he may need to at least retreat a bit from his functions."
Industry Minister Arnaud Montebourg said earlier that the state "in its role as shareholder would take a position if needed at the right time on the continuing case."
France Telecom shares were up 0.7 percent to 7.52 euros at 11:47 am British Time (1047 GMT) in line with France's blue-chip index <.FCHI>.
(Reporting by China Labbe and Leila Abboud; Writing by Geert de Clercq; Editing by Mark Potter)