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Henri Proglio gave up his claim to the chairmanship of defense group Thales (TCFP.PA) on Tuesday, bringing into the open a simmering row with Economy Minister Emmanuel Macron over the veteran French businessman's Russian interests.

Macron had earlier this month asked the 65 year-old former boss of power utility EDF (EDF.PA) to cut his ties with state-owned Russian nuclear company Rosatom if he wanted to take on the Thales role.

In an interview with Le Monde newspaper on Tuesday, Proglio made his choice and accused Macron of conducting a smear campaign.

"I have had enough of suspicion, of humiliation ... This has to stop, taking me for a puppet, a spy, a greedy man, a traitor ... For weeks now I have been sullied by a campaign fed by Bercy," he was quoted saying, in reference to the ministry's Paris headquarters.

Macron denied any campaign against Proglio, whose decision comes a day ahead of an annual shareholder meeting that would have effectively confirmed him in the Thales chairmanship.

"It was normal that we asked Henri Proglio to choose between taking on a non-executive role at the head of Thales and his undertakings, actual and paid, close to major players in the Russian military and civil nuclear sector," Macron told reporters.

"It seemed incompatible to us. It's not a problem of law, it's a problem of ethics and conflict of interest."

POLITICAL REASONS

Thales is a major contractor for Dassault Aviation's (AVMD.PA) Rafale jets and for the Mistral helicopter carriers, whose delivery to Russia has been delayed due to western concerns over its part in the Ukraine crisis.

Proglio was proposed as Thales chairman by the Dassault family, which along with the French government controls Thales.

In the interview, Proglio said concerns about his Russian interests were ridiculous and a ruse to get him out of the job.

"Behind all this is an attempt to bring down a man for political reasons ... I defy all attempts to pigeonhole me politically. I am above all a businessman."

Proglio is a board member of ABR Management, part of Russian Bank Rossiya, which is subject to U.S. sanctions against Russia.

Le Monde said he also sits on the boards of two companies tied to Rosatom: Akkuyu Nuclear JSC and Fennovoima Ltd, created to handle nuclear power projects in Finland and Turkey.

Macron said Thales' existing chairman and CEO, Patrice Caine, would lead the search for a replacement.

The state and the Dassault family each hold about a quarter of Thales. Two of the votes on Wednesday's AGM agenda were designed to bring Proglio onto the board as a Dassault representative, one adjusting board representation and the other allowing a person over the age of 65 to be chairman.

Thales, whose shares were down 2 percent, declined comment.