F1’s commercial supremo Bernie Ecclestone will appear in a Munich court this morning on the first day of his bribery trial, that is expected to last well into the Autumn. The case, slated to run for 26 days, will run for months as the judge has scheduled a limited number of days in court each week to allow Ecclestone to continue to run the multi-billion dollar F1 business from his office in London.
What’s behind it?
The 83-year-old is accused of paying German banker Gerhard Gribkowsky around £26 million in bribes in 2006 in order to smooth the sale of his bank’s shares in F1 to Ecclestone’s preferred buyer, CVC Capital Partners. Gribkowsky has already been found guilty of corruption, tax evasion and breach of trust and is serving and eight-and-a-half year sentence. He was convicted by the judge who will preside over Ecclestone’s trial – Peter Noll.
What are the likely arguments?
Court papers released last week ahead of the trial show that prosecutors intend to prove that Ecclestone paid the money because he feared losing his grip on the sport he had built up since the late 1970s.
Ecclestone, however, believes he has a strong defence. Central to his rebuttal of the accusations is his insistence that the money was paid because Gribkowsky was blackmailing him about his UK tax affairs. However, this was dismissed as “implausible” by a London judge last Christmas, during a separate civil hearing into whether the payment from Ecclestone to Gribkowsky had lowered the value of a stake held by a firm called Constantin Medien.
Ecclestone won that case, but at a cost to his reputation and his standing going into Munich. The judge in the London High Court case describing Ecclestone as an “unreliable witness” and confirmed that the F1 chief had made “an illegal payment”. Ecclestone responded by saying that the judge had not heard the full story, which he believes will come out during the Munich criminal trial.
According to German media sources, around 40 witnesses, including Gribkowsky himself, are expected to testify, with Ecclestone’s own testimony, which could come in the early phases of the hearing, likely to be the highlight.
What happens if…?
CVC’s managing partner Donald Mackenzie has said that Ecclestone would be replaced if he were found in Munich to have done anything illegal. CVC is believed to have earned over £5 billion out of F1 in eight years and plans to earn more in the coming years, regardless of whether Ecclestone is convicted.
Whatever the outcome of the trial, Ecclestone has said that he plans to step back from running F1 full time and take a more strategic role in due course. The Daily Mail wrote last week that Ecclestone’s in-house lawyer Sacha Woodward Hill is set to fill his shoes while he is in court, but not as a long-term successor. She was his preferred choice, before he appeared to anoint Red Bull boss Christian Horner. Horner has distanced himself from the idea and in any case Ferrari has a right of veto over Ecclestone’s replacement as CEO and it has said privately that it would exercise it if Horner were formally proposed for the role.
It is now thought that Ecclestone’s successor will come from outside F1 and will be backed by a younger management team, which will feature some bright talents from the current F1 paddock in areas like sponsorship, rights negotiation, team and FIA mediation.
It is noticeable that with the uncertainty surrounding Ecclestone’s future – and therefore the commercial direction of the sport – some big beasts from F1’s past 40 years have started to reassert their influence the sport, with Ron Dennis returning to McLaren, Niki Lauda at Mercedes and Luca di Montezemolo, Ferrari’s president, saying this week that he planned to spend a lot more time in F1.
Without the strong hand of Ecclestone many fear that F1 could degenerate into a land-grab by powerful figures from the various corners of the sport. The flip side of that is the possible appearance of a more joined-up approach that builds on the already huge popularity of the sport, takes it to a new level and derives more income from a wider audience via new content distribution strategies.
The next few months will be fascinating.