Ecclestone is to ‘bloody busy’ for German bribery case

As rumors of flotations, sales of shares, enterprise values (a theoretical takeover price for lack of a better definition), Concorde Agreement negotiations and much more swirling in the muddy waters of Formula One, a small court case in Germany has sprung up again involving F1 boss Bernie Ecclestone.

The case of Gerhard Gribkowsky is an intriguing one as the former risk manager of BayernLB was incarcerated for tax invasion after failing to report approximately $40m in income. The phantom income was purportedly derived from Ecclestone in a payment that many have alleged was bribe money to grease the sell of BayernLB’s holdings in Formula 1 to CVC Capital after the German bank acquired the interest from Kirch as that company slid into receivership.

Gribkowsky has been in jail since January of 2012 and this week he broke his silence and admitted that payment was, in fact, bribe money telling the court that the allegations were ‘essentially true’. This has lead prosecutors to focus their continuing investigation into the Bambino Holdings trust owned by Ecclestone from which the payment was said to have been made.

For Ecclestone’s part, the F1 boss maintains he has ‘nothing to hide’ in the matter and still claims the payment was made due to threats by Gribkowsky regarding Bambino Holdings. The suggestion is that Grbkowsky was going to approach HM Revenue & Customs with information that would have been false but expensive for Ecclestone to combat. In essence, Ecclestone says it was a ‘shake down’ and the money was effectively hush money for Gribkowsky.

With the recent sell of F1 shares from CVC Capital to a private investment group touting an enterprise valuation of over $9B, it makes the nearly 50% holdings that BayernLB sold to CVC Capital for $1.6B more fuel for the banks outrage over short-selling and malfeasance at the hands of Gribkowsky justified. There is a good chance that BayernLB were not exactly sure what they owned in F1 equity as the series was inseparably tied to Ecclestone at the time and the banks knowledge of the racing series was from a purely financial position and not one of motor sport economics or potential gains based upon the assets and contracts the series possessed.

Given BayernLB’s lack of understanding of the inner-workings of F1, little surprise they relied on Gribkowsky (the bank’s risk manager) to determine the real value of their equity position. The bank has long held that they were duped and short-sold their interest in F1 by crafty, if not dubious, business means including a bribe or back-scratching payment made to Gribkowsky.

Many have considered what Ecclestone would gain from such a move and the short answer could be the retention of his position as CEO of the series. BayernLB has no obligation in keeping Ecclestone at the head of the series (although to do otherwise would have been financially detrimental to the sport) but CVC Capital was willing to retain Ecclestone in such capacity. As the British billionaire was heading for an imminent divorce from his wife, Slavica Ecclestone, perhaps the thought of retaining the CEO position and revenue it brings remained high on his list of to-do’s but that’s pure speculation.

Regardless, Gribkowsky has spoken, suggested the bribe allegations are true and Ecclestone has said he was willing to travel to Germany and repeat his position on the matter to the court. Now, however, he’s too busy to do such a thing because he’s intrenched in the negotiations over the sport’s financial future. Irony or ignominy will depend on how Ecclestone manages the affair and at this point many suggest it will eventually come down to a financial fine should German prosecutors find him guilty of bribery.

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