Ecclestone Bribery Fight Spreads to Second Front in U.K.
For a man used to life in the fast lane, Bernie Ecclestone is finding the courts slow going.
The 83-year-old Formula One chief executive officer may wait months for a German court to decide whether prosecutors have enough evidence try him for paying a bribe to facilitate the sale of a stake in the racing series almost eight years ago.
He’s got a more immediate problem in London where a civil case related to the bribery allegations starts tomorrow. German prosecutors may be watching for anything that will help their case.
“Ecclestone is engaged in a multiple-front war, facing the problem of multiple defense lines,” Alexander Engelhardt, a German defense lawyer who specializes in public relations during litigation, said in an e-mail. “What might help in the U.K. may well hurt in Germany, and whatever is produced in either proceeding must be expected to resurface in another civil or criminal proceeding somewhere sometime.”
The bribery scandal related to the 2005 sale of Bayerische Landesbank’s controlling stake to CVC Capital Partners Ltd. has hung over Ecclestone since 2011. That’s when German police arrested Gerhard Gribkowsky, the former risk manager of BayernLB. Gribkowsky was convicted of taking bribes and German prosecutors are now seeking permission to try Ecclestone on bribery and breach of trust charges.
In the London trial, Constantin Medien AG (EV4) is suing Ecclestone for $171 million. The German media company says BayernLB’s stake was sold to CVC too cheaply because of the bribe to Gribkowsky.
“It’s not ideal, it would be better if it wasn’t happening, but we can’t change the court system,” Ecclestone said in a telephone interview, when asked if it would clash with his duties as CEO. He said CVC, a U.K.-based buyout firm, wants him to remain as chief executive.
The billionaire is scheduled to give evidence in the first week of November. CVC co-founder Donald Mackenzie is also set to testify.
CVC paid $814 million for the 47 percent stake in 2006 while lawyers for Ismaning, Germany-based Constantin said in court documents that the stock was worth $2.8 billion.
“The Constantin case is not only about a huge amount of money,” Engelhardt said. “The U.K. proceeding is dangerous in that it may produce incriminating evidence which could be used by Munich prosecutors.”
Gribkowsky, who managed the lender’s interest in Formula One, said during his trial in a German court that he was paid $44 million to steer the bank’s holding in the racing series to CVC and agreed to a sham contract under which Ecclestone received a kickback.
Gribkowsky was convicted in June 2012 of taking bribes from Ecclestone and sentenced to 8 1/2 years in prison. Prosecutors, when they won the conviction last year, said that Ecclestone was a “co-perpetrator” in the bribery scheme. It took them almost a year to file formal charges in May. Then the court had the 223-page indictment translated into English and sent to Ecclestone and his lawyers for comment before it could start deliberating the charges. In complex white collar crime-cases in Germany, the court approval process can take months.
Ecclestone has repeatedly said the payments were made to Gribkowsky following threats that he would inform U.K. tax authorities about a family trust controlled by his then wife.
Ecclestone chose to pay Gribkowsky “off rather than face the aggravation, delay and potential risks, however unjustified, that” was threatened, his lawyers said in court documents.
Constantin, a former stakeholder in Formula One, says it should have received more than $100 million because of a contractual obligation to be paid a percentage of the proceeds of a share sale. Sabine Lais, a spokeswoman for Constantin, declined to comment on the trial.
Ecclestone is worth at least $2.8 billion, according to Bloomberg Billionaires Index. This excludes the value of Bambino Holdings Ltd., the multi-billion dollar trust that Ecclestone said Gribkowsky threatened to tell tax officials about.
The delays have slowed Formula One’s progress toward a planned share sale. The racing circuit suspended plans for an initial public offering in June of last year, citing market conditions, and hasn’t resurrected the plans amid Ecclestone’s legal wrangles.
Ecclestone said in an interview in May that it would be “silly to go into the market” until the court cases are resolved.
The uncertainty over Ecclestone’s legal status hasn’t shaken his support from some allies in the racing community. Formula One’s reputation won’t be damaged by the trial whatever the outcome, Paul Stoddart former owner of the now defunct Minardi racing team, said in a telephone interview.
“Bernie is the reason why F1 is in the position it is in today,” he said. “I’ve not seen an ounce of credible evidence that proves he is guilty. F1 will be much poorer the day Bernie is not there.”
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