Bernie Ecclestone, Singapore, 2010

Why Ecclestone faces a trial which could end his control of Formula One

2014 F1 seasonPosted on | Author Keith Collantine

Bernie Ecclestone, Singapore, 2010Thursday’s news that Bernie Ecclestone’s power over Formula One had been diminished amid allegations of him bribing a German banker was a watershed moment in a story which has developed over the past three years.

Ecclestone’s decades-long spell at the helm of the world’s most famous motor sport is not yet at an end – but this could be the beginning of the end.

The idea of Ecclestone relinquishing control of the sport he revolutionised would have been unthinkable not long ago. How has it become a realistic possibility?

Ecclestone first crossed swords with Gerhard Gribkowsky, an employee of Bayerische Landesbank, in 2003. BayernLB was one of three banks which shared a 75% stake in Formula One at the time.

Among the most effective of Ecclestone’s tactics, which have helped him amass a personal fortune estimated to be over £2.3bn, has been the art of selling ownership of F1 without yielding control over it.

But Gribkowsky thwarted Ecclestone’s attempt to recoup the 75% stake for the bargain price of $600 million. According to a 2011 biography Gribkowsky challenged Ecclestone’s control of the sport, telling him “you are just the CEO working on the shareholders’ behalf”. This began a struggle between their pair for control over the sport.

Gribkowsky scored another victory in December 2004 when Justice Andrew Park gave a ruling which handed to the banks control of Formula One Holdings, one of the myriad companies set up by Ecclestone to run the sport.

Now Gribkowsky’s attention turned to another of these companies, Formula One Administration, in which even more power was vested. Another case was due to be heard in May 2005 but two months before that Ecclestone and the banks reached a deal out of court.

The details were not disclosed but in a statement Gribkowsky declared the banks had “regained the influence that corresponds to the shareholding structure with this deal”.

Later that year a new potential buyer of Formula One emerged: CVC Capital Partners. It was in the course of F1′s sale to CVC that Ecclestone is alleged to have made a deal with Gribkowsky which now threatens his power over the sport. Here is how events have unfolded since then.

Timeline: The Bernie Ecclestone-Gerhard Gribkowsky affair

Date Event
April/May 2005 Around this time Ecclestone is alleged to have reached an agreement with Gribkowsky, which prosecutors claim constituted a bribe, details of which emerged later.
25th November 2005 CVC announces purchase of F1 from BayernLB and Ecclestone. It subsequently buys shares in F1 from other banks, and also purchases Allsport Management which sells F1 track signage and runs the lucrative Paddock Club.
5th January 2011 Gribkowsky is arrested and held in Stadelheim prison in Munich.
April 2011 Ecclestone meets with prosecutors in Germany.
20th July 2011 Gribkowsky is charged with breach of trust, tax evasion and being in receipt of corrupt payments. Prosecutors claim Ecclestone paid £27m ($44m) in bribes to him.
21st July 2011 Ecclestone admits making the payment to Gribkowsky and says he did so because Gribkowsky “threatened” to make false allegations regarding Ecclestone’s link to Bambino Holdings, his Swiss-run family trust, which would attract the attention of the UK tax authorities. “He was shaking me down and I didn’t want to take a risk,” said Ecclestone. The allegations are later revealed to involve whether Ecclestone controlled the offshore trust, through which the alleged bribe was paid.
3rd August 2011 Ecclestone says former Benetton and Renault boss Flavio Briatore “did make a payment for me” because Gribkowsky “did not want the money paid direct from the UK”. “In no shape or form is Briatore involved in this,” Ecclestone adds.
24th October 2011 Gribkowsky’s trial begins.
5th November 2011 HM Revenue and Customs declare an interest in investigating whether Ecclestone was involved in tax evasion.
8th November 2011 The court is told Ecclestone lied about his reason for paying the bribe. Documents shown to the court claim he initiated payments to Gribkowsky to ensure he retained control of F1 after its sale to CVC.
16th January 2012 Ecclestone’s aide Andre Favre says at Gribkowsky’s trial in Munich: “Ecclestone told me to transfer $5 million of his money to Mr. Gribkowsky by using a special company so his name wouldn’t appear”.
20th June 2012 Gribkowsky tells the court the bribery charge against him is “essentially true”.
21st June 2012 Ecclestone says he “was a little bit stupid” to pay Gribkowsky. “Normally I would have told him to get lost.”
27th June 2012 Gribkowsky is sentenced to eight-and-a-half-years in prison after the court finds he acted to protect Ecclestone’s interest in the sale of the stake and helped Ecclestone receive commission worth £25.4m ($41m) from the bank. State prosecutor Christoph Rodler says Ecclestone was “not the victim of an extortion but the accomplice in an act of bribery”. Gribkowsky later appeals against the verdict.
29th December 2012 Ecclestone says CVC “will probably be forced to get rid of me” if he is charged over the Gribkowsky affair.
10th May 2013 Gribkowsky withdraws his appeal against his conviction.
15th May 2013 German media reports claim Ecclestone has been charged with bribing Gribkowsky.
19th May 2013 Ecclestone describes the charges against him as “a complete load of rubbish”.
2nd July 2013 Ecclestone adds he is “not worried in the least because I have told the truth”.
17th July 2013 Ecclestone confirms he has received an indictment from the German prosecutors over bribery charges.
18th August 2013 The 256-page indictment of Ecclestone claims “Gribkowsky endeavoured to create pressure against Bambino and the accused [Ecclestone] by repeatedly insinuating that the accused was effectively in charge of the trust […] this did not, however, present a real threat for separate tax treatment of the accused and the Bambino Trust on the part of the British tax authorities, since Dr Gribkowsky and BayernLB had no specific proof of any such connection”.
29th October 2013 German media group Constantin Medien brings a case against Ecclestone and others in the London High Court. It claims that Ecclestone’s payment to Gribkowsky resulted in F1 being sold to CVC at less than its true value. It seeks over $100m in damages.
19th November 2013 CVC co-founder Donald Mackenzie says Ecclestone would be fired “if it is proven that Mr Ecclestone has done anything that is criminally wrong”. Mackenzie adds Ecclestone told him he had forgotten about making the payment to Gribkowsky. “I had trouble believing you could forget payment of $40 million,” added Mackenzie.
5th December 2013 Ferrari are revealed to have the power to veto Ecclestone’s choice of successor if they have had prior involvement in an F1 team.
16th January 2014 The German authorities announce Ecclestone will go on trial in April on charges of bribery. The case will be heard by judge Peter Noll, who sentenced Gribkowsky in 2012. In the meantime Ecclestone steps down from the F1 board but retains day-to-day control, albeit with supervision.
17th January 2014 Ecclestone says “Everybody on the board is more than a million per cent supportive. They just want me to get on with doing what I always do. The minute the court case is over then I’ll be back on the board again.”

The outcomes of Ecclestone’s various ongoing legal challenges could have profound implications for the future of the sport. If he manages to regain the control he once had over the sport it will be his greatest feat so far.

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