Court hears ‘a corrupt bargain was made between Mr Gribkowsky and Mr Ecclestone’

Gerhard Gribkowsky with Bernie Ecclestone and his daughters Petra and Tamara on the grid ahead of the 2005 Italian Grand Prix

Gerhard Gribkowsky with Bernie Ecclestone and his daughters Petra and Tamara on the grid ahead of the 2005 Italian Grand Prix

Formula 1  supremo Bernie Ecclestone was accused of making a “corrupt bargain” that cost a German media firm millions in a London court on Tuesday, one of multiple legal challenges that threaten his control of the motor sport.

Constantin Medien is seeking more than $100 million in damages from Ecclestone, arguing that he and three other defendants deliberately undervalued Formula 1 when private equity fund CVC Capital Partners bought into the business in 2005.

A sports-focused media group, Constantin Medien had an interest in the sale of German bank BayernLB’s stake in the motor sport to CVC, and Constantin says it lost out as a result of the undervaluation.

The legal fallout from the sale has already seen former BayernLB banker Gerhard Gribkowsky jailed for 8 years for corruption, and a German court is due to decide next year whether Ecclestone himself should stand trial on bribery charges.

Gerhard Gribkowsky with Bernie Ecclestone and Flavio Briatore at Monza in 2005

Gerhard Gribkowsky with Bernie Ecclestone and Flavio Briatore at Monza in 2005

In addition, the Prosecutor’s Office in Geneva said on Tuesday that it had received a denunciation from Constantin Medien concerning the disputed transaction and had in response launched a criminal investigation.

Ecclestone denies any wrongdoing, but if the various legal battles were to go against him, his control of a sport that he has helped turn into a global money-spinner could be in jeopardy.

The 83-year-old is scheduled to appear as a witness in the London High Court next week.

After months of pre-trial arguments, the civil trial began on Tuesday morning with Philip Marshall, lead counsel for Constantin Medien, outlining his client’s case.

Referring to the German indictment against Ecclestone, Marshall said that it had revealed that “a corrupt bargain was made between Mr Gribkowsky and Mr Ecclestone”.

The purpose of the bargain, Marshall said, was “to facilitate a sale of the Formula 1 Group to a purchaser chosen by Mr Ecclestone in return for remuneration [for Gribkowsky] and a position in Formula 1 going forward [for Ecclestone]”.

Bernie Ecclestone with Gerhard Gribkowsky and Donald Mackenzie of CVC Capital Partners

Bernie Ecclestone with Gerhard Gribkowsky and Donald Mackenzie of CVC Capital Partners

Judge Guy Newey told Marshall that he would not allow him to rely on the German indictment as evidence and Constantin Medien would have to prove its case for damages on the evidence before the London court.

The other three defendants are Ecclestone’s former lawyer Stephen Mullins, the Ecclestone family’s Bambino Holdings and Gribkowsky, who is mounting no formal legal defence in the case.

Marshall said that Ecclestone arranged with Gribkowsky for BayernLB to sell its 47 percent stake in Formula 1 to CVC at a knock-down price of $830 million because he stood to gain both financially and keep his position at the helm of the sport.

“These arrangements effectively dealt with a serious threat from BayernLB to Mr Ecclestone’s control of the Formula 1 Group,” he said.

Ecclestone does not deny making payments of $44 million to Gribkowsky but says he was the victim of extortion after the German banker threatened to make false claims over his tax affairs.

Bernie Ecclestone no stranger to the media spotlight

Bernie Ecclestone no stranger to the media spotlight

Marshall said that the combined benefit to Ecclestone and Bambino Holdings of the sale was over $1 billion.

He said that based on what the Ecclestone family got out of the transaction, the total valuation of Formula 1 should have stood at between $3.09 and $3.34 billion, in stark contrast to a valuation just in excess of $2 billion used by CVC at the time.

“We see the transaction as being significantly weighted for the benefit of Mr Ecclestone and Bambino, and significantly to the detriment of BayernLB and those who had an interest [in the sale of its stake],” he told the court.

After Marshall completes his opening submissions on Wednesday, lawyers for Ecclestone and the other defendants will give their responses. The trial is scheduled to last six weeks (Reuters)

Subbed by AJN.

  • JPSmoove

    More crooks tipping the scale in their favor with no regard for the law or what is good for the sport! What else is new? What’s new is not what is being said but what is not being said. Not a peep from any of the teams or team owners….which leads me to believe the teams and/or team owners must have in some way profited from this. Why hasn’t the FIA banned Ecclestone for bring the sport to “ill repute”.. i.e. Fabio Briatore. Credibility is like virginity. Once you lose it, you can never get it back – Author unknown

  • fools

    whats the deal with all this? GUILTY or Not Guilty? Whats going on…? Every month there’s a new story but nothing gets exposed or nothing happens to Bernie.

    Yet Bernie is at every race and still making billions…so whats the use of reporting this if nothing. Next year the same article will come out for the German GP that he is avoiding to be seen at the race due to bribery and may be handcuffed or jailed yet nothing?

    I get it…he has billions to pay off people (attorneys and pays hefty fee) but come on! This is ridiculous…if it was were any other non rich human we would be in prison for the last 4 years…

  • 9dF

    @fools: Everything is explained in the article, not just the headline

  • SteveO

    +1 9df

    also, let me guess the German GP is suddenly under threat?