Financial News

  • 24 April 2014, 12:58

F1 Boss Ecclestone In Court On Bribery Charges

Formula One chief executive Bernie Ecclestone is in court in Munich at the start of his trial on charges of bribery.

The trial could threaten his control of F1 and, if proven, could see him jailed for up to 10 years.

Ecclestone, 83, is accused of paying a $44m (£26m) bribe to a German banker to  facilitate the sale of the bank's stake in F1 to its current owners, the private equity group CVC.

Prosecutors allege the payment was made by Ecclestone to Gerhard Gribkowsky, an executive at Bavarian bank BayernLB, to ensure that he remained in control of F1 following the sale.

It is alleged that Ecclestone favoured a sale to CVC because they were committed to retaining him as chief executive.

Gribkowsky received an eight-year prison sentence in 2012 for tax evasion and corruption in relation to the payment.

The same panel of judges that heard Gribkowsky's case will adjudicate on the case against Ecclestone.

Ecclestone denies that the $44m was a bribe, and will argue that he made the payment because Gribkowsky was blackmailing him by threatening to make unfounded allegations about his tax affairs to HMRC.

Ecclestone, Gribkowsky and the chief executive of CVC Donald McKenzie are all expected to give evidence during the trial, which will last until at least September.

The trial judge Peter Noll has agreed to schedule hearings for one or two days a week in order to allow Ecclestone to continue running the F1 business, and to attend Grand Prix.

He will be required to attend court throughout, however, and on the opening day will hear the 257-page indictment against him read to the court.

In the indictment the prosecutors claim: "The accused decided to win over the since-convicted Dr Gribkowsky by offering him the prospect of personal gain in order to end Dr Gribkowsky's confrontational course and dispense with BayernLB as a Formula One shareholder as quickly as possible."

Ecclestone stood down from the F1 board in January after he was charged by Bavarian prosecutors, but CVC retained him as chief executive, saying it was in the company's best interests.

Earlier this year Ecclestone won a High Court case brought against him by Constantin Medien, which claimed it had lost out because the payment to Gribkowsky ensured the sale to CVC was undervalued.

The judge ruled in Ecclestone's favour, but concluded that he was an "unreliable and untruthful" witness and that the payment was a bribe.

The trial will hear details of CVC's purchase of the F1 holding company from its shareholders. These included Bambino, a company owned by the Ecclestone family trust and a consortium of banks, of which BayernLB was the largest. Ecclestone received a $63m (£38m) commission on completion of the deal.

After the CVC takeover Ecclestone was retained as chief executive. It ensured that he continued the control of the sport he has exercised for more than 40 years, during which time it has grown into a $1bn-a-year business.