Judge Questions Testimony of Witness Backing Ecclestone Claims

A German judge overseeing Bernie Ecclestone’s criminal trial questioned the testimony of a lawyer who backed the Formula One chief’s argument that a $44 million payment was an effort to prevent troubles with U.K. tax authorities rather than a bribe.

Frederique Flournoy, a Swiss lawyer and director of Bambino Holding Ltd., a trust company set up for Ecclestone’s ex-wife in 1997 after their divorce, told the Munich court today that Bambino agreed to pay the money to Gerhard Gribkowsky under a consulting agreement to make sure he wouldn’t contact British tax authorities.

“Gribkowsky made the insinuation that Bambino and Mr. Ecclestone were the same person,” Flournoy said. “Gribkowsky could have gone to the HMRC which would have prompted them to rebound the investigation or issue a tax bill against whoever based on him as a witness. On the other hand, we didn’t really know what he knew.”

Ecclestone is on trial on charges he bribed Gribkowsky, the former chief risk officer of Bayerische Landesbank, to ensure he wouldn’t oppose a sale of the lender’s stake to CVC Capital Partners Ltd. Gribkowsky, who managed BayernLB’s interest in Formula One before the sale, was convicted in 2012 of accepting bribes and sentenced to 8 1/2 years in prison.

Ecclestone, the chief executive officer of the Formula One racing series, had nothing to do with Bambino and there was no reason to think any of its tax arrangements were improper, Flournoy told Presiding Judge Peter Noll.

Difficult to Comprehend

“In that case, I still find it very difficult to comprehend what damage could have been caused by Gribkowsky,” Noll said.

If Ecclestone’s role in establishing the trust was completed in 1997, and Gribkowsky only came to BayernLB in 2003, what was anyone afraid of, the judge asked.

“If you use a structure to maximize the tax position under tax legislation, you hope what you have done is correct and you hope the tax authorities also interpret it this way,” Flournoy replied. “But you can never be sure what the interpretation will be in the end.”

U.K. tax collectors have “extreme powers,” she said. If they issue a tax bill, it reverses the burden of proof and Bambino would have had to show nothing is wrong.

“We as lawyers know how difficult it is to prove that something isn’t the case,” she said.

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