Bernie Ecclestone, the chief executive officer of Formula One, agreed to pay $45 million as a reward to facilitate the sale of a stake in the racing series to CVC Capital Partners Ltd., a key witness testified.
Gerhard Gribkowsky, the former chief risk officer of Bayerische Landesbank, which sold the stake, told a Munich court today where Ecclestone is on trial for alleged bribery that in April or May 2005, Ecclestone promised to “take care of him” if the stake was sold.
CVC and Bayerische Landesbank, known as BayernLB, signed the deal in December that year. Three months later, at a Formula One race in Bahrain, Ecclestone discussed his reward again, Gribkowsky said.
“Ecclestone asked me, ‘Did you get a bonus?’” Gribkowsky told the court. “When I replied that I didn’t, he said, ’F--- ing bank. Tell me a number.’”
The corruption scandal has plagued Ecclestone since Gribkowsky was first arrested three years ago. Gribkowsky managed the lender’s interest in Formula One at the time and said in his own court case in 2012 he was paid $44 million to steer the sale of the bank’s 47 percent stake to CVC, a U.K.- based buyout firm. The same panel of judges now hearing Ecclestone’s case sentenced Gribkowsky to 8 1/2 years in prison.
Ecclestone, 83, refuted the allegations at the beginning of the trial in April, saying he paid the $44 million to avoid a fine in a British tax investigation. He said Gribkowsky threatened to misinform U.K. tax officials about an Ecclestone family trust.
While he thought Ecclestone’s initial promise “to take care of” him meant a potential job offer after the deal, he didn’t think the remark was important, he said. When Ecclestone suggested CVC as the potential buyer in August, the earlier promise only played a role “subconsciously” in his decision to back the sale, Gribkowsky said.
“The CVC offer was much more than we thought we would ever get,” Gribkowsky said. “It was unthinkable that anybody at the bank could have said no to it.”
He had convinced the bank’s leaders by the end of September 2005 to proceed with CVC as the exclusive bidder, Gribkowsky told the court. CVC’s offer valued Formula One at $2 billion. The bank later received 840 million euros for its stake.
Stephen Mullens, the director of Bambino Holding, the family trust to which Ecclestone had transferred his assets, sent Ecclestone a fax in November 2005 with a draft contract for a payment for between $500,000 and $50 million to Gribkowsky, the former bank manager said. The exact amount was agreed on by Ecclestone, Mullens and Gribkowsky in London later in 2006, according to his testimony.
Gribkowsky ultimately received about $1 million less than the $45 million because a final installment was never paid, he said.
Mullen was also charged by Munich prosecutors last year. His case hasn’t gone to trial yet. He’s scheduled to testify in Ecclestone’s case in July.
The former BayernLB manager said today that while he tried to exert pressure on Ecclestone in 2004, including making allusions to Bambino, he never mentioned the tax issues involved. He said the pressure was intended to get Ecclestone to agree to settle pending court cases over Formula One corporate governance between BayernLB and Ecclestone.