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Ecclestone denies wrongdoing as former F1 bank chief is charged

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Ecclestone denies wrongdoing as former F1 bank chief is charged
Jul 21, 2011, 9:18 AM

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

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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