Ecclestone Is Subject to N.Y. Law, Bluewaters Tells Court
The U.K.’s Bernie Ecclestone, accused of paying a bribe to steer a Formula One racing stake to CVC Capital Partners Ltd. is subject to the “long-arm jurisdiction” of New York law, according to the company making the accusation.
Bluewaters Communications Holdings LLC, which claims a New York base, sued Ecclestone in Manhattan in November for $650 million, saying it was the high bidder for shares in the racing company, which it values at $10 billion.
Ecclestone said he isn’t subject to U.S. law, and a family trust questioned Bluewaters’ claim to U.S. residence, saying the entity was created days before the lawsuit. Bluewaters said yesterday in court papers that the car-racing executive is covered by New York law because he blocked a rival bidder from arranging a transaction among New York sellers and New York buyers.
“New York has a paramount interest in protecting the transactions spawned by its capital markets,” the financial firm said.
Bluewaters arranged $1 billion in “committed financing” from New York investment firms Apollo Global Management and King Street Capital Management, also offering to top any genuine bidder, it said in the filing in New York State Supreme Court. The offer was ignored, causing “injury within the state” by denying business to Bluewaters and other investors, it said.
Bluewaters’ first company filing with New York State’s Division of Corporations was Nov. 6, 2012, according to online records. The lawsuit was filed Nov. 16.
The New York-based company suing Ecclestone was created by the “original” Bluewaters firm “apparently for litigation purposes only,” Ecclestone family trust Bambino Holdings Ltd., a defendant in the case, said last month.
Kent Yalowitz, a lawyer for Bluewaters at Arnold & Porter LLP, said the original Bluewaters “does not have operations at this time,” declining to say where it was based. John Gregg, a shareholder of Bluewaters, is one of the individuals suing Ecclestone, he said.
“The defendants’ fixation on Bluewaters’ change of incorporation belies a head-in-the-sand approach to the strong connection that this case has to New York,” he said.
Gregg, described in filings as a Bluewaters representative who made the rival F1 bid, was chief financial officer of the U.K.’s biggest cable-television company, NTL Inc., before its 2002 bankruptcy.
Ecclestone asked the court last month to dismiss the suit on jurisdictional grounds. A U.K. citizen living in London, the Formula One Holdings Ltd. chief executive officer has visited the U.S. eight times since 2005, including trips to investigate the possibility of a racing event in New York or New Jersey and with his family to Las Vegas, he said in court papers.
Ecclestone, 82, transformed London-based F1 in three decades into one of the world’s most popular auto-racing series, attracting an average of 50 million TV views on a Sunday.
In the U.S., he owns no property, leases no offices and employs nobody except lawyers defending him in the lawsuit, he said. Nor did any actions alleged in the lawsuit occur in the U.S., he said.
Bluewaters accused Ecclestone of paying a $44 million bribe to BayernLB director Gerhard Gribkowsky to steer to CVC the 47 percent stake previously owned by BayernLB, which kept Ecclestone on as head of F1.
Ecclestone said his payments, which moved from Swiss accounts to an Austrian account without assistance from New York banks as far as he knew, were unrelated to the sale to CVC. Rather, they were made to buy Gribkowsky’s silence after “insinuations” that he might tell U.K. tax authorities about certain activities of a family trust controlled by Ecclestone’s wife at the time, Ecclestone said in the filing.
“I was concerned that misinformation that he provided to the authorities might be taken seriously and might cause them to assess me to owe a tax bill of many hundreds of millions, if not billions of pounds that I believe I did not owe but which would have caused me to become bankrupt,” he said.
Gribkowsky, who managed Munich-based BayernLB’s interest in F1 as the bank’s chief risk officer, said in court papers he was paid $44 million to direct the stake to London-based CVC and agreed to a sham contract under which Ecclestone received a kickback.
Public prosecutor Christoph Rodler said at a June trial that Ecclestone was a conspirator in the bribery. Ecclestone has said he doesn’t expect to be charged. Gribkowsky in July appealed a German court verdict sentencing him to more than eight years in prison.
In October, state-owned BayernLB sent a letter to Ecclestone’s lawyers demanding damages over the alleged bribery, Matthias Luecke, a bank spokesman, said at the time.
BayernLB acquired the F1 stake in 2002. Gribkowsky clashed with Ecclestone and sued him in London over corporate-governance rules changed to limit the lender’s influence. Ecclestone wanted to push BayernLB out and saw a chance when CVC showed interest, prosecutors have said.
The case is Bluewaters Communications v. Ecclestone, 653965/2012, New York State Supreme Court, New York County (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at firstname.lastname@example.org.