After 19 years in the driver’s seat of Formula One, a bribery trial in Munich may be the start of Bernie Ecclestone’s final lap running the racing series.
Ecclestone goes on trial tomorrow over allegations he paid a $44 million bribe to facilitate the sale of Formula One in 2005. Judges in two countries have already found that the 83-year-old made illegal payments to Gerhard Gribkowsky, a former executive at Bayerische Landesbank.
“It doesn’t look terribly good for him,” said Sylvia Schenk, a Frankfurt lawyer and Transparency International’s senior adviser for sport. “But the justice system still needs to prove his individual responsibility. It’s not yet a one-horse race.”
The corruption scandal has plagued Ecclestone since Gribkowsky, BayernLB’s ex-chief risk officer, was first arrested three years ago. Gribkowsky was convicted in 2012 of accepting bribes and sentenced to 8 1/2 years in prison.
Gribkowsky, who managed the lender’s interest in Formula One, said in court he was paid $44 million to steer the sale of the bank’s 47 percent stake in the racing circuit to CVC Capital Partners Ltd., a U.K.-based buyout firm, and agreed to a sham contract under which Ecclestone received a kickback.
The same panel of judges that heard the Gribkowsky case will decide Ecclestone’s fate at the trial, which is scheduled for non-consecutive 26 days through September. Ecclestone may testify on the first two days of trial, tomorrow and May 2.
Sven Thomas, Ecclestone’s German attorney, didn’t return a call seeking comment. He and his colleague Norbert Scharf denied the allegations in a statement in January.
Ecclestone, who has run Formula One’s commercial unit since 1995, has consistently maintained that he was the victim of a shakedown by Gribkowsky, who he said threatened to tell U.K. officials about an Ecclestone family trust.
“I want to clear up all the nonsense,” Ecclestone said in a Feb. 20 interview.
An exit would create problems for CVC as Ecclestone has run the racing series on his own, without a deputy.
The case has slowed Formula One’s progress towards a planned share sale. The racing circuit suspended plans for an initial public offering in June 2012, citing market conditions, and hasn’t resurrected the plans amid Ecclestone’s legal wrangles.
The problem remains that “there is no obvious successor” to Ecclestone, said Mark Jenkins, a professor of business strategy at the U.K.’s Cranfield University who has written a book about the business lessons from Formula One. “The concept of a succession plan is an anathema to him.”
Michael Iltschev, a German spokesman for CVC, declined to comment. CVC has said it had no knowledge of any payment to Gribkowsky.
A U.K. court that looked at the issue in a civil trial ruled in favor of Ecclestone and CVC, saying the payments didn’t effect the value of one investor’s stake. The good news ended there.
While dismissing the $140 million case, the judge found that Ecclestone made a “corrupt” payment and that he was neither a “reliable or truthful” witness. He’s also being investigated by U.K. tax authorities over the Bambino family trust at the center of the dispute with Gribkowsky.
If Ecclestone is convicted in Germany, CVC will have little choice but to ask Ecclestone to resign, even if he is able to avoid the jail term given to Gribkowsky, Schenk said.
‘Exhibit of Integrity’
“Under a compliance point of view you have to remember that Ecclestone has already admitted paying the $44 million to Gribkowsky, and for reasons which don’t seem to be really kosher,” Schenk said. “That’s equally problematic for a company. It’s not exactly an exhibit of integrity.”
Earlier this month, Ecclestone said that a group of Formula One teams is “having a conversation” about buying a stake in the series.
But the three-year-old proceedings have slowly loosened his grip on the series that has 19 events from Austin to Abu Dhabi. In January, after the German court ordered Ecclestone to stand trial, he agreed to step down from the Formula One board and gave up the authority to approve “significant” contracts.
For his part, Ecclestone said he will attend court hearings on Tuesdays and Wednesdays in Munich and the day-to-day trial won’t interfere with his role at Formula One.
The trial isn’t “a full-time job,” he said in the Feb. 20 interview.
Ecclestone, who took control of Formula One’s television rights in 1981, has “held his cards close to chest” in turning the series into a global brand and there will be a learning curve for his successor, Chris Lencheski, former president of Comcast Corp.’s Front Row Marketing Services who has previously worked on sponsorship deals in Formula One.
“The challenge is to keep the same interest level sustained,” Lencheski said by phone.
CVC, the sport’s controlling shareholder, has “very smart people” looking after the value of the series and will be working on a succession plan for Ecclestone, Lencheski said.