UPDATE 1-French state holding firm head says not candidate for Veolia CEO

Tue Feb 25, 2014 7:33am EST

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* Dassault a minority shareholder with 6 percent (Adds comments, background)

PARIS, Feb 25 (Reuters) - France said on Tuesday David Azema, the head of French state holding company APE, would have to appear before a government ethics commission before he could seek the top job at water and waste group Veolia, even though he denied he was a candidate.

Earlier this month, a French magazine said the Dassault family, the second-biggest shareholder in Veolia Environnement ., was seeking to oust Chief Executive Antoine Frerot to replace him with Azema.

French Industry Minister Arnaud Montebourg said Azema would have to appear before the commission and accept a review of possible conflicts of interest if he wanted the job, apparently indirectly confirming the report.

Montebourg told reporters at the European American Press Club the government would make a statement about Azema's candidacy at the end of that commission's investigation.

But Ameza told Reuters later on Tuesday: "I have received no firm request from the nominations committee of Veolia to occupy the function of chief executive. I am not a candidate for this position."

He made no comment on whether he had had informal discussions with Dassault about the position. He said no dossier had been deposited with the ethics commission.

The French state is the top shareholder in Veolia with an 8.9 percent stake, held via state bank Caisse des Depots et Consignations (CDC).

The CDC and Veolia declined to comment.

The Dassault family - which holds its 6.0 percent stake via unlisted Groupe Industriel Marcel Dassault, which also has a majority holding in Dassault Aviation, maker of the French Rafale warplane - was not available for comment.

Two weeks ago, when French magazine Le Point reported that Dassault was seeking to oust Frerot, an official at French Prime Minister Jean-Marc Ayrault's office told Reuters the government "does not interfere in management appointments at private companies".

Frerot's mandate runs until the group's next general shareholders meeting on April 24. Veolia's board is due to formally vote on the renewal of his mandate at a March 12 meeting. The board is also meeting on Wednesday to approve the 2013 earnings, which will be released on Thursday.

Board members might informally discuss the Veolia leadership issue, but are unlikely to make a decision on Wednesday.

Frerot has not formally put forward his candidacy but has hinted that he is keen on a second term.

"My vision goes beyond the month of April," he said during a strategy briefing early this month.

With a two-year cost-cutting and debt-reduction plan largely done, the French water, waste and energy group is targeting areas with high growth potential, to make up for falling margins in its traditional water business and lower volumes and prices in its cyclical waste business. (Reporting by Nick Vinocur, Benjamin Mallet and Geert De Clercq; Writing by Geert De Clercq; Editing by Alison Williams)

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