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Ecclestone denies wrongdoing as former F1 bank chief is charged
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Posted By: James Allen  |  21 Jul 2011   |  9:18 am GMT  |  28 comments

F1′s commercial supremo Bernie Ecclestone has admitted paying £27 million to a former colleague but says it was not a bribe.

THe 80 year old said that he has done nothing wrong and will clear his name, as prosecutors in Germany allege that he paid bribes of $44 million (£27 Mill) to Gerhard Gribkowsky, who was once the lead banker responsible for the 2006 sale of the sport to current owners CVC.

Prosecutors further allege that Mr Ecclestone received $41.4m (£25.4m) in commissions from the bank, as well as a large payment to Bambino Holdings, the family trust. The prosecutor has told my colleagues at the Financial Times that Ecclestone “remains under investigation”.

Gribkowsky, who has been in jail in Munich since January, was formally charged with “corruption, embezzlement and tax evasion” yesterday. The prosecutor alleges that his former employer, Bayerische Landesbank, incurred damages of $66 million as a result of Gribkowsky’s actions. The prosecutor said that Gribkowsky sold his bank’s 48% of F1′s commercial rights without an updated valuation in return for payments in the form of “fake consulting contracts”, which were paid into Gribkowsky’s Austrian companies and on which Gribkowsky did not pay tax.

It is not clear at this stage whether Ecclestone will face any charges, but the Daily Telegraph suggested that prosecutors may wait to see the outcome of the Gribkowsky trial and what is said during it, before deciding on further actions. Under German law a court must now decide whether Gribkowsky should face trial, but this appears a formality and it is possible that a trial could take start before the end of this F1 season.

Ecclestone has already been to Munich once, in April, to answer the prosecutor’s questions.

This could all have a very interesting effect on the ongoing discussions with teams and the FIA over the 2013 Concorde Agreement, not to mention the possible sale by CVC of its interests in F1. Although the private equity firm claims that it has no interest in selling, behind the scenes they are believed to be keen to exit, but to get the best price they must wait for the negotiations with teams and the FIA to be concluded and for the situation in Germany to be resolved.

The real value for CVC only comes from Ecclestone remaining at the helm as CEO with all the teams signed up to a new Concorde Agreement and there are some significant challenges there.

Meanwhile the word is that although NewsCorp is going through some significant challenges of its own with the phone hacking scandal in the UK, it remains interested in F1. Time will tell whether any possible changes in management as a result of the scandal change that view.

Through what is likely to be a fascinating period, it’s important to keep in mind Martin Whitmarsh’s recent words, “The teams are working together and this sport isn’t going anywhere without the teams,” he said. “If we stay together, we can control the direction of this sport and we’re not trying to do that for any other reason than what’s in the best interests of the sport.”

* Ecclestone has subsequently admitted that he paid the money to Gribkowsky but said he did so because Gribkowsky was threatening to go to the Inland Revenue in connection with the Ecclestone family trust Bambino. Speaking in the Daily Telegraph he said that the money he received from Bayern LB was a commission on the sale of the stock to CVC, amounting to 5% of the purchase price.

He said that this information is what he gave to the prosecutor on his visit there in April.

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28 Comments
  1. rpaco (other rpaco) says:

    Funny isn’t it that only a week or so ago Bernie said that F1 does not need to have a concorde agreement. Presumably this was just “divide and rule” ruse.
    If the prosecution includes the illegal payments made to Bernie’s Bambino fund presumably he will have to be charged as well. Though Bernies finances are like a barrel of randomly interconnected eels so it will be difficult to prove. CVC carried out it’s (Bernie’s) own investigation earlier this year satisfying CVC that they were in the clear. However one must wonder whether the investigation included Bernies dealings as well.

    1. wayne says:

      Uh oh, Bernie has now (reportedly) said “He (Gribkowsky) was shaking me down and I didn’t want to take a risk. Nothing was wrong with the trust. Nothing at all.”

      So he does admit making payments but he is claiming they were made under duress – I’m not sure that is an excuse is it? Surely the law determines that you report the ‘shake-down’.

      I’m predicting the end of Bernie over this. The time is right and his reputation will be sullied regardless of the outcome. Not sure F1 can tollerate that going forward.

    2. Sebee says:

      Did you see, now he said it was a shake-down!!!

      I know Bernie is not Superman, but he is Efoneman – and I hardly believe someone like this would shake him down.

      He should have said this from the start – because I certainly don’t believe it now. Tell me exactly why Bernie wouldn’t have gone to Bayerische Landesbank and told them about this shake-down?

      Now I am really concerned for Bernie. I think he will be charged.

      1. rpaco (other rpaco) says:

        So Bernie got $40M commission and $20M into Bambino. The Bank says it paid no commission, but the money must have come from somewhere, either the money must be missing from the bank or CVC’s bill is $40M less than what they paid. either the bank or CVC must have noticed a $40M error. Unless the bank is lying and did pay Bernie his commission but from a completely different account, in this case it seem likely that Gribkowski did the paying from a secret fund or just nicked it.

        One should remember that the new anti-bribery law came into effect in the UK recently with long spells in the nick as a deterrent. This will effectively put an end to all UK overseas trade in the middle east and Africa until the customary and necessary bribes are re-configured into commission, licenses and fees.
        Gribkowski threatening to tell HMRC that Bambino is Bernie’s is like threatening to reveal that Murdoch owns News International.
        There are a few well know facts of Bernies empire.
        James’ excellent colleague Joe Sawyer gave a good background back in January in his blog at that time.

  2. wolf says:

    This story seems to be strangely absent from the official website. It will be interesting to follow the money as this story progresses.
    As always James I’m grateful for the fascinating insights you provide into the world of F1.

    1. Simple says:

      There’s nothing strange about that. The official site never comments on the financial politics of the sport.

    2. Dale says:

      Let’s not forget who owns F1.com? Now who is it again?

  3. Dale says:

    With respect folks but what else whould anyone here expect Ecclestone to say?

    I say, sooner or later mud sticks & if it’s not now then it’ll be later.

    I wonder if Ecclestones phones were ever hacked?

    1. wayne says:

      Yes you would expect him to say that even if he was guilty of any wrong-doing. But let us not forget you would also expect him to say that if he was in fact completely innocent. Whihc right now he is until it is proven otherwise.

      Frankly, too much money changes hands in F1 for this sort of thing not to go on, in my uninformed opinion. Human beings and massive piles of cash are involved – I’d be suprised if no-one was using a bit of creative accounting to further personal interests.

      Still could be worse, we could always have FIFA looking after F1!

  4. rvd says:

    Seems pretty much true to form.

  5. chris green says:

    Both the F1 and the Murdoch story have one common element.
    Both organisations are run by olg guys who do not fundamentally understand the new paradigm post GFC. F1 has a top heavy funding arrangement that rewards greedy bankers and takes money from the teams. Bernie is responsible for the F1 financial model.
    Murdoch refuses to concede that newspapers are dead. Marshall Mcluen said that when a media organisation gets into major trouble it is because that media has already become obselescent.
    Both these individuals are redundant.

    1. Liam in Sydney says:

      Untrue regarding Murdoch and newspapers. Murdoch fully understands that newspapers are dead, but he, and others like him in the news industry, have yet to figure out an optimal model for making users pay for online content. It is an extremely tricky problem for them to solve.

  6. andrew says:

    Somebody needs to write a book about Eccelstone. From used car dealer in Kent, to F1 Supremo, there’s got to be a very interesting story in there, somewhere. I’ll bet Hollywood would love it.

    1. wayne says:

      It’s been written and it’s called ‘No Angel’ and is every bit as fascinating as you would imagine.

    2. verstappen says:

      Tom Bowler did. Good read, although some say not all the facts are correct.

    3. AndyFov says:

      Google “Bernie’s Game”, Amazon have that. I’ve been meaning to buy it for a while, but haven’t got round to it.

  7. Jo Torrent says:

    Those practices in business are very comimon and one of the least chocking things Bernie did if actually he did.

    What would be interesting to know is, what if Bernie was charged and convicted ? Can he be banned from running the FOM, can he be jailed or will it only be a financial penalty ?

    1. Sebee says:

      We all enjoy F1, don’t we?

      Bernie is a guy we love to hate, but ultimately he’s a legend to this sport.

      Corporations, bankers, politicians all pulling fast ones with the public cash register – if you don’t support Bernie in his efforts to stick it to a bank – where is your sense of right and wrong? :-)

      What’s 66 million to a bank who probably was bailed out with billions by German government a few years back, and again will be soon when Greece….

      1. Daniel says:

        I’ll give it to you here with this post–great logic. Bernie bribed the guy and now says it was a payment under duress. Lol. This is the begining of the retirement of Mr. E.

  8. I wonder if Bernie fancies a role at FIFA? He would probably fit right in.

    1. Sebee says:

      Too many ethic boards and play fair propaganda. Also – to much foul faking which can’t be resolved with a 20 second race result time add-on.

      Finally – does FIFA set price for hosting an event take it of leave it, or is that considered morally wrong?

      I say to you – FIFA president wishes he could be running F1 instead.

  9. A.N. Other says:

    I have no knowledge of Ecclestone’s business maneuverings. However, it would not surprise me
    in the least to learn that Ecclestone had done something I’d be ashamed of doing.

    I do have knowledge of F1, since the days of the Tyrell 6 wheeler and the Cosworth DFV era, And because of this, I will be happy on the day Ecclestone is gone forever from the F1 scene.

  10. CartRider says:

    I just love F1!

    Jean Todt wanted less politics in F1, but the sport just can’t live without it! Last year, it was calm, but they couldn’t suppress it for long, and this year, the sport just flourishes with different kind of controversies. There have been the Bahrain-gate, the exhausts-gate, and now this.

    Well, I never felt too bad about politics in F1.

  11. tim. says:

    Said before..F1 is politics only…every two weeks a race breaks out

  12. Bec says:

    The Tom Bowler book is more a work of fiction than Harry Potter.

  13. Liam in Sydney says:

    So, nothing new in the underlying story, is there? No one could believe that Bernie hasn’t found ways to get himself some extra cuts of the pie? And for sure there are other cuts coming in that no one will ever find out about. This is the way of the MNC.

  14. Karley says:

    What would happen if the worst (for Bernie) did happen and Bernie went to jail for paying bribes, CVC would still own most of F1 but who would ‘run’ F1?

  15. Greg says:

    For all the good and bad Bernie does, I like the guy and not for his dealings that happen all the time in most businesses, but because he invests a lot in the UK and as far as I’m aware he pays into the UK system (unlike some drivers).

    If I’m wrong please tell me………….!

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