Telefonica president Juan Villalonga emerged from a critical board meeting yesterday (June 28) with his position intact, despite an ongoing investigation into accusations that he benefited from insider information when he purchased options for shares of Telefonica in January, 1998.

There was speculation that Telefonica's key shareholders, banks BBVA and La Caixa, might bow to pressure to demand the controversial president's resignation. Reports suggest that BBVA and La Caixa prefer to wait for the results of the investigation being conducted by the National Market Values Commission (CNMV).

Villalonga is quoted in local press as having told the board that he is "innocent" and has a "clear conscience" in the affair. He also reportedly called the accusations - spearheaded by El Mundo newspaper - a "personal attack." Indeed, some onlookers have referred to the controversy as a witch-hunt.

Still, there is ongoing concern that even if Villalonga is not ousted he could face difficulties running the company without strong support from his top shareholders, and under constraints from an increasingly unsupportive government. Villalonga has already come under scrutiny in the last year for a controversial stock options plan for Telefonica executives, and he butted heads with BBVA, La Caixa and Spanish president Jose Maria Aznar when he initiated merger talks with Dutch telco KPN.

Reports out of yesterday's board meeting also appear to support rumours that Juan Jose Nieto, acting CEO of Telefonica holding Antena 3 Television, may leave his position at the broadcaster to focus on his dual role as CEO of Telefonica Media and new member of Telefonica's powerful Executive Committee.