Formula One - On and Off Track week 17

Formula One - On and Off Track week 17

By: Berthold Bouman, F1 Correspondent

Story Highlights

  • Bahrain deadline rapidly approaching
  • Ecclestone changes tune on bribery case
  • Ecclestone to retire if F1 would be sold

Bahrain deadline rapidly approaching

Although mixing Formula One with politics generally doesn’t sound like a good idea, at the same time associating Formula One with a regime that kills their political opponents, doesn’t sound like a good idea either. This is the dilemma Bernie Ecclestone and Formula One are facing about a possible reinstatement of the Bahrain Grand Prix.

The question is not only whether the Formula One circus and its complete entourage would be safe during a Bahrain Grand Prix. With similar conflicts presently taking place in other Arab and north African countries, the question is what the world would think of the sport if they would go about their business as usual, and would ignore the cry for more democracy which has been violently suppressed by the powers to be in Bahrain.

Bahrain International Circuit
Bahrain International Circuit

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The tiny island Kingdom of Bahrain is currently in the midst of a three month state of emergency and many European countries have issued a negative traveling advise as the situation still remains very unstable. According to the UK Telegraph, Bahrain’s Crown Prince Salman bin Hamad al-Khalifa, who is also one of the promoters of the race, has announced he will not attend the royal wedding in London on Friday, as he fears his presence could overshadow the event.

Protesters have previously said they could use the presence of the world press at the Bahrain International Circuit to seek attention for their case, which in the end means Formula One would get involved in politics, whether they like it or not. The situation has taken another turn now, a group of activists called the 'Youth of the 14 February Revolution' has published a letter in which they ask FOM CEO Bernie Ecclestone not to reinstate the Bahrain Grand Prix until their demands for more democracy have been honored by the present King of Bahrain.

Organizing a motor sport festival in the middle of a despotic crackdown on the population, wouldn't be well understood

Bahrain activists

The statement which was posted on Facebook and other social networks read: “We are addressing to you this open letter publicly regarding the organization of Bahrain Grand Prix, and we, citizen of Bahrain, and human rights supporters of the world, are asking you to consider the challenges to organize what should be a happy sporting event in the middle of a country under siege and martial law, surrounded by tanks and military forces, while the population is being reduce to silence, killed, tortured etc.”

The statement further mentioned that ‘organizing a motor sport festival in the middle of a despotic crackdown on the population, wouldn't be well understood and accepted worldwide.’ Which is of course spot on, as many governments all over the world have expressed their concerns about the still ongoing violence and bloodshed in Bahrain and other Arab countries, and some countries even have severed all diplomatic and economic ties with those countries.

For Ecclestone the situation poses many dilemmas, he is a personal friend of the King and Crown Prince of Bahrain, and the commercial rights holder would lose millions of dollars if the Grand Prix would be cancelled all together. The 80-year Ecclestone recently said he doesn’t want to get involved in politics, because ‘we have politicians for that’, of course totally ignoring the fact there are no politicians in Bahrain, let alone politicians who could change the current situation.

Bernie Ecclestone CEO FOM with Crown Prince Shaikh Salman bin Isa Hamad Al Khalifa
Bernie Ecclestone CEO FOM with Crown Prince Shaikh Salman bin Isa Hamad Al Khalifa

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Another dilemma Ecclestone faces is that if he would cancel the Bahrain venue because of the current political environment and human rights issues, he could be forced to rethink the presence of Formula One in other non-democratic countries like China and Abu Dhabi. On the other hand, if he or the Crown Prince would give the Bahrain Grand Prix the green light, he can be sure he will have to answer a lot of questions, not just from motor sport fans, but also from journalists and politicians all over the world, and they will probably ask him whether Formula One has a conscience or not.

The world has changed dramatically since the arrival of modern information technology, and the world has witnessed how events have unfolded in Bahrain earlier this year. Although it seems things are relatively quite in Bahrain, the country is still in a state of emergency, and it has been said before, sometimes peace means having a bigger stick than to other guy. And last but not least, if the Bahrain Grand Prix would be reinstated, it could re-ignite the protests which could lead to more violence and bloodshed, and that is the last thing Formula One and the people of Bahrain want.

Obviously, the best solution for everyone involved would be a more democratic and safer Bahrain, but that is not going to happen in a few months, canceling the race is the only option, the commercial rights holder should take their loss, and wait until Bahrain have sorted out all of their problems.

The FIA has set a deadline: the decision must be made before May 1, which Sunday.

Ecclestone changes tune on bribery case

Bernie Ecclestone is said to be involved in a secret financial money transfer, which has emerged after German authorities arrested banker Gerhard Gribkowsky and launched an investigation about possible fraud and bribery. Gribkowsky was taken into custody in early January this year on charges of corruption, tax fraud and breach of trust towards his former employer, the Bayerische Landesbank (BayernLB).

Bernie Ecclestone
Bernie Ecclestone

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The former banker was involved in the sale of the stake the BayernLB had in Formula One when it was sold to CVC in 2006. CVC is a private equity firm who now owns the commercial rights of the sport, and it is suspected Gribkowsky received 50 million Euro for the transfer. A spokeswoman for the German prosecutors in January stated they were reviewing the sale because ‘the stake had been sold without being properly evaluated’ and Gribkowsky ‘in turn received $50 million in payments disguised via two consultancy agreements’.

In plain English that means Gribkowsky sold the stake for less than what is was worth at the time, and received 50 million Euro for his ‘services’. CVC claims they have no knowledge of a possible bribery and denied any involvement. “CVC confirms it has no knowledge of, nor any involvement in, any payment to Mr Gribkowsky or anyone connected with him in relation to CVC’s acquisition of Formula One,” they said in statement which was rapidly issued after Gribkowsky had been arrested.

CVC confirms it has no knowledge of, nor any involvement in, any payment to Mr Gribkowsky

CVC Capital Investment

Before Formula One was sold to CVC, the BayernLB had a 48 percent stake in SLEC Holdings, who, together with Ecclestone’s family trust fund, owned the companies that in fact ran Formula One. CVC bought both Ecclesone’s and BayernLB’s stake and founded a new firm, Alpha Prema, now Formula One’s majority shareholder.

Gribkowsky was already a controversial figure in the German banking world, in 2007 and 2008 the bank reported a loss of 2.3 and 2.0 billion Euro respectively as a result of their huge investments in the in sub-prime mortgage securities in the United States. During the economic crisis the bank ran into problems and several CEO’s, including Gribkowsky, were heavily criticized because they had invested tenths of billions of Euros in the American sub-prime mortgage market. As a result of the commotion, BayernLB CEO Werner Schmidt and chairman Erwin Huber of the German CSU political party had to resign.

Gribkowsky was also involved in the purchase of 50 percent of the Austrian bank Hypo Group Alpe Adria for 1.63 billion Euro. When the economic crisis hit the Austrian bank, it was resold and nationalized for one Euro to avoid the collapse of the bank. At that moment German authorities got suspicious about the role Gribkowsky played and launched an investigation which ultimately led to his arrest.

Ecclestone still being quizzed by German authorities
Ecclestone still being quizzed by German authorities

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Ecclestone caught the attention of the German prosecutors after they had discovered someone had paid Gribkowsky 50 million Euro in 2006. Public Prosecutor Hildegard Baumler-Hosl invited Ecclestone to question him about the alleged bribery at the beginning of this month and Ecclestone at the time stated he would give his full cooperation to the enquiry.

“I have been co-operating with the State Prosecution Office's investigation of the affairs of Dr Gribkowsky since the outset. When I was informed that there was a first suspicion in relation to my perceived involvement in the matter I went to see the Senior State Prosecutor and her team in Munich earlier this month to clear up any allegations against me,” he said. And added, “I will continue to give the State Prosecution Office my full co-operation in whatever capacity it may ask and I am confident that when the full facts have been established I will be exonerated of blame for any wrongdoing.”

Nicely said, but the fact remains Gribkowsky did get the money, he still remains in custody, and according to German laws no one can be held in custody for such a long time without having substantial evidence that links him with the bribery or any other fraud.

Ecclestone has always denied his involvement, but this week he dramatically changed his tune, he no longer maintains his innocence, but according to the German Focus magazine, Ecclestone has now admitted he paid Gribkowsky, but suggested Gribkowsky has blackmailed him to pay the 50 million Euro. The magazine claims Ecclestone has again given evidence, this time in the form of official testimony in which he accuses Gribkowsky of extortion.

The German apparently threatened Ecclestone with ‘the divulgence of sensitive information regarding the structure of his businesses’. And an Austrian news paper reported Ecclestone has now chosen to cooperate with the German authorities in the hope he will be given a lighter penalty in the event he is found guilty of fraud.

Ecclestone to retire if F1 would be sold

And yes, it’s Ecclestone day today, the next item is also about the man who has run Formula One for the last four decades. He always maintained he would only retire on the day he would die, but now apparently has changed his mind. He is known as a ‘workaholic’ which has already cost him a great part of his social and private life, but he now has stated he would quit if Formula One would be sold.

Tamara Ecclestone, Daughter of Bernie Eccelestone and Petra Ecclestone, Daughter of Bernie Eccelestone
Tamara Ecclestone, Daughter of Bernie Eccelestone and Petra Ecclestone, Daughter of Bernie Eccelestone

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He made his remarkable statement after rumors emerged Mexican billionaire Carlos Slim and newspaper and media tycoon Rupert Murdoch have plans to buy Formula One from CVC. Without a doubt Formula One is really big business and the sport generated billions each year, and selling Formula One will involve many billions of dollars.

Murdoch’s News Corporation is trying to form a consortium with Slim to take over Formula One, and according to Reuters have already started talks with the main players, and it was suggested these talks could lead to a bid within the next few months. Slim is already involved in the sport as backer of the Sauber team and their Mexican driver Sergio Perez.

News Corp’s interest in buying into the sport is also not a surprise, as they could broadcast Formula One events through their vast network of TV stations around the globe. The news was first reported by the UK based Sky News, which is, not surprisingly, owned by News Corp. The reports are a bit nebulous whether Murdoch is interested in buying Formula One itself, or is trying to form a consortium to subsequently gain control of the broadcasting rights.

Ecclestone is also a man of many mysteries, as he last week denied Formula One was for sale, and told it was complete ‘rubbish’. Yesterday however, he again sang a different song. “I'm old enough to get a pension, so I don't have to get a job,” he said to the UK Sunday Times. He also said he would only stay if he could work together with the new owners, if not he would quit.

So far all parties have declined to comment on the reports, but there was one interesting comment. It suggested Ecclestone wanted to leave the sport before his problems with the German authorities could devalue the commercial rights of Formula One, and in that case the news about Murdoch and Slim must have been very welcome for the FOM boss, and his alleged retirement as FOM boss, could be nothing more than an attempt to get a better price for his beloved Formula One circus.

Join us again next week for another episode of “Formula One: On and off track”

Formula One - On and Off Track week 16

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About this article
Series General , Formula 1
Drivers Sergio Perez , Bernie Ecclestone
Teams Sauber
Tags bahrain, bribery, deadline, ecclestone, gribkowsky, murdoch, slim