Judge: Ecclestone did pay bribe and was not “reliable or truthful”

2014 F1 season

Bernie Ecclestone, 2013Bernie Ecclestone may draw only limited satisfaction from his court victory today against Constantin Medien.

Justice Newey may have ruled in Ecclestone’s favour but his 114-page verdict (PDF) makes it clear he believes the Formula One boss bribed the now-jailed banker Gerhard Gribkowsky in 2006.

The judge also called into question Ecclestone’s reliability and truthfulness as a witness.

With the Formula One boss set to go on trial in Germany on charges of bribery in April, this was not the complete victory he was hoping for.

Why Constantin Medien lost

Constantin Medien, a German media rights company, alleged that Formula One’s sale to current owners CVC Capital Partners was arranged for less than its true value because of a bribe paid by Ecclestone to Gribkowsky. It claimed it was owed compensation for commission lost on a potentially more valuable sale.

In dismissing the case the judge did not find that the bribe did not take place – quite the opposite – but rather that its intention was not to influence the sale price.

Justice Newey ruled that Ecclestone and his former lawyer Stephen Mullens did not intend for shares in Formula One held by Bayerische Landesbank to be sold at less than their true value:

“It was no part of Mr Ecclestone’s purpose (or Mr Mullens’) for BLB’s shares to be sold at an undervalue, and neither Mr Ecclestone nor Mr Mullens had any desire for the shares to be sold at an undervalue or believed the price at which they were in fact sold to be below market value.”

“No loss to Constantin has been shown to have been caused by the corrupt arrangement with Dr Gribkowsky,” he added. “That fact is fatal to the claim as against all the defendants.”

The judge also rejected Constantin’s case on other legal grounds.

What the case revealed about the Gribkowsky deal

However the judge was in no doubt a bribe was arranged between Ecclestone and Gribkowsky, stating as much in a stark five-word sentence in his conclusion: “The payments were a bribe.”

But rather than being a bribe to influence the price of the sale, the judge rule Ecclestone paid it to maintain his position in control of Formula One.

That power is something Ecclestone has always jealously guarded, but Gribkowsky emerged as a potential threat to it before 2005. The testimony given in court and statements from in ongoing legal proceedings in Germany revealed new details of how the deal came to pass.

In March 2005 Gribkowsky presented his employer BayernLB’s management board with three options for the strategic future of Formula One. These included a “strategic alliance with Bambino [Ecclestone's family trust] / [Mr Ecclestone]” and a “strategic alliance with contractors / teams”.

He also proposed a third option which he described as the “end of the BE era”, meaning Ecclestone, including his “removal as CEO at FOA, FOM and removal from the boards of the future main companies FOAM and FOWC”.

Gribkowsky described Ecclestone’s control of F1 and the labyrinthine companies governing it as follows:

“[Ecclestone] headed up and continues to head up the predominantly non-transparent and unnecessarily complex [Formula One group] like ‘a lord of the manor’. His business methods are not transparent and on occasion in a very grey area.

“[Ecclestone] makes it quite clear with his actions and active press work that this should also remain the case. An honest willingness to design the future with the teams with the participation of the banks cannot be identified.”

On April 7th, BayernLB’s supervisory board “unanimously agreed to the suggested course of action that after regaining control of the operative businesses of Formula One the basic strategy that will be followed is that of entering into a strategic alliance with the manufacturers/teams and implementing the associated measures accordingly.”

Shortly after this Ecclestone made his move to bring Gribkowsky on-side in a meeting. “[Mr Ecclestone] made it clear to me that given the situation, there were two possibilities: either he presented me with a buyer and I helped him get the sale through, or he would kick us out,” said Gribkowsky.

The judge also noted: “Dr Gribkowsky is also reported as having said this: ‘Basically, what Mr Ecclestone said at this meeting was that if I helped him then – literally – ‘I will take care of you!’ I took the phrase ‘I will take care of you’ to be an offer to change sides and to join him.”

“At the time I understood that Mr Ecclestone was offering me a job, namely to transfer to Formula One as an advisor, in conjunction with a fee of course. And that would be in return for me not obstructing a sale…”

Vitantonio Liuzzi, Toro Rosso, Bahrain, 2006The fee was agreed the following year at the season-opening Bahrain Grand Prix, which Gribkowsky described: “At lunch on the Saturday, a conversation took place between Mr Ecclestone and myself in the motorhome belonging to FOA/FOM.”

“During this conversation, Mr Ecclestone enquired first of all whether I had received a bonus from the bank for the sale to CVC. I said that I had not, which Mr Ecclestone commented with the words ‘fucking bank’.

“Mr Ecclestone then asked me about my further plans for the future. I took this to be a hint and reference to our agreement back in April/May 2005, and I told him that I could imagine working as a consultant in Formula One and that I had already spoke to Mr Mullens about it.

“Mr Ecclestone commented this latter phrase with the words, ‘Forget Stephen’ and challenged me to ‘tell me a number’, whereupon I told him 50. To me it was clear that that meant $50 million. The conversation ended with Mr Ecclestone saying that he would think about it.

“On the Sunday before leaving for the airport, I handed over to Mr Ecclestone in an envelope the draft contract which I had drawn up and taken with me. Even if I denied it and turned a blind eye to it at the time, it was clear to me that this was the reward for my supportive involvement – along the lines Mr Ecclestone had wanted – in the sale to CVC of [BLB’s] stake in Formula One.”

The details were agreed in a subsequent meeting at the Rib Room restaurant on 10th May 2006. “Part of this meeting was spent discussing the issue of Formula One and part the prospective payments to be made to me by Mr Ecclestone,” said Gribkowsky.

“Mr Ecclestone said that I would receive 45 million. He meant US dollars, as was usual with Formula One. Mr Mullens was apparently going to take care of everything else, i.e. the contractual agreements and the processing of these. In this discussion, we also established that the Advisory Agreement between myself and Mr Ecclestone would begin on 1st June 2006.”

Why Ecclestone’s bribe defence was rejected

The judge noted: “In cross-examination, Mr Ecclestone said that it was agreed at the Rib Room dinner that Dr Gribkowsky would be paid a total of $45 million and that Mr Mullens would deal with the contractual arrangements.”

Howerver Ecclestone rejected Gribkowsky’s claim the payment was made to secure his support: “I made a payment to Dr Gribkowsky because he was shaking me down concerning some allegations that he could say to the [Inland] Revenue that I controlled our family trust, which would have been extremely expensive.”

“There was never a bribe,” he added. “I made a payment to Gribkowsky for completely different reasons. I had no reason to bribe him. I paid him money not to do what he said that he could and was capable of doing, which was informing the English Revenue that I was running the trust.”

Significantly, as far as Ecclestone’s forthcoming case in Germany is concerned, the judge doubted this version of events:

“Neither Mr Ecclestone nor Mr Mullens identified any specific threat from Dr Gribkowsky. Each instead referred to ‘insinuations’.

“When giving evidence in Germany, Mr Ecclestone said that Dr Gribkowsky ‘never specifically stated or threatened that any given event would take place’ and that there was no threat along the lines of ‘Either you pay or I go the tax office’.

“In the present proceedings, Mr Ecclestone explained in cross-examination that Dr Gribkowsky never said what he would tell HMRC and accepted that Dr Gribkowsky did not give any details of how he would substantiate any claim that Mr Ecclestone was to be identified with the Bambino Trust;”

“The evidence indicates that Dr Gribkowsky is unlikely to have been in a position to give HMRC information that could cause Mr Ecclestone or Bambino any serious difficulties.”

Ecclestone’s reliability questioned

The judge also questioned the reliability of Ecclestone’s evidence: “Mr Robert Miles QC, who appeared with Mr Richard Hill QC for Mr Ecclestone, did not maintain that Mr Ecclestone’s evidence had invariably been accurate.”

“He blamed some of Mr Ecclestone’s answers on a tendency to answer questions too fast: he suggested that Mr Ecclestone was inclined to say things quickly that might, on reflection, not be right. He also stressed that many of the relevant events happened a long time ago and that Mr Ecclestone is 83 years old; it is thus, Mr Miles said, not surprising that Mr Ecclestone’s
recollection of some things should be poor.

“I recognise that there is force in these points. Even, however, making allowances for the lapse of time and Mr Ecclestone’s age, I am afraid that I find it impossible to regard him as a reliable or truthful witness.”

He noted that in parts of his judgement he “cannot accept Mr Ecclestone’s evidence”.

The judge did not accept Ecclestone’s explanation for why he paid the bribe to Gribkowsky. Justice Newey deemed the payment was paid as a reward “for facilitating the sale of BayernLB’s shares in the Formula One group to a buyer acceptable to Mr Ecclestone” which would allow him to retain his power over the sport.

“Mr Ecclestone’s aim was to be rid of the banks,” he concluded. “He was strongly averse to their involvement in the Formula One group and was keen that their shares should be transferred to some one more congenial to him.”

The threat of further legal action in Germany has already loosened Ecclestone’s grasp on the sport. He has professed himself confident about the potential outcome, but while today’s victory goes some way towards vindicating that the detail of the verdict will surely give cause for concern.

The article below includes more background to this lengthy case and a timeline of events so far:

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23 comments on Judge: Ecclestone did pay bribe and was not “reliable or truthful”

  1. BasCB (@bascb) said on 20th February 2014, 13:43

    Interesting reading, and it shows very well why the German court case is on the table in the first place. If I was a shareholder or participant in CVC, I would internally make sure that Bernie already goes on pension “by his own choice to make more time for the preparation of the trial in Germany” and remain in a position at CVC only as an adviser.

    But lets see how it goes, with Bernie, its not unimaginable that he will in the end somehow end up back in control and better than ever running “his” sport

  2. McKenzie (@mckenzie) said on 20th February 2014, 14:04

    Methinks BE is on the way out. I won’t be surprised if BE is removed before the court case in Germany.

  3. blackmamba said on 20th February 2014, 14:21

    But doesn’t it prejudice the upcoming case in April what the judge said? He has already been found guilty before the case even starts!

    • Timothy Katz (@timothykatz) said on 20th February 2014, 16:02

      Not really. This was a civil action in the British Court. April’s event is a criminal action in the German Court.
      I’m not sure that the German court would accept that the ruling of a civil court in a foreign country would have prejudicial effect on a criminal case in their own jurisdiction. Will the German court be sitting with a jury, anyone?

      • BasCB (@bascb) said on 20th February 2014, 16:28

        Will the German court be sitting with a jury, anyone?

        No, in German law its the judge(s) who decide(s) @timothykatz

        • Timothy Katz (@timothykatz) said on 20th February 2014, 17:09

          @bascb Thanks for that. In that case, there is even more reason that the result of the British case will have no effect on the German case.

          • BasCB (@bascb) said on 20th February 2014, 19:21

            Hm, on the contrary, I think a German judge will quite interested in the opinion of his colleague over in the UK and the reasoning for his opinion.

          • Timothy Katz (@timothykatz) said on 20th February 2014, 20:35

            Disagree, Bas. A court will only be interested in the arguments and evidence presented before it – not in reportage, hearsay or records from another court that was considering a totally different matter. It’s possible however, that the German State Prosecutor will be extremely interested in the evidence presented before the British court and their judgement, but the German Judge would not be.

          • BasCB (@bascb) said on 20th February 2014, 22:06

            Any judge would consider reportage and records from another court in a related issue Timothy, off course the Judge would make his/her own decision using all known facts. A judge’s opinion is sure to weigh for more than just hearsay. Why on earth would the German judge think that a UK judge’s opinion formed from material and behaviour + given statements from BE would not bear some merit? And the way Bernie testified in the Gribowsky case does a lot to confirm the impression that BE is clearly not telling everything he knows and is rather conveniently forgetting some facts hiding behind “it being long ago” and him being a poor old guy.

          • Why on earth would the German judge think that a UK judge’s opinion formed from material and behaviour + given statements from BE would not bear some merit?

            Why? B/c then he’d be acknowledging influence totally inappropriate to deciding the case on its merits in Germany!

            Sheesh.

  4. craig-o (@craig-o) said on 20th February 2014, 17:18

    I do think it’s a matter of time before Bernie either steps down or somebody boots him out somehow.

    Where’s the petition to get Keith in charge of F1? Maybe that way we’d actually get rid of double points ;)

  5. After stating this about Ecclestone, the judge continued to state that the head of the Catholic Church lives in Vatican city, and that bears are indeed known to defecate in wooded areas.

  6. reminds me of a used car sales man

  7. Michael Brown said on 20th February 2014, 19:43

    Justice Newey

  8. PMccarthy_is_a_legend (@pmccarthy_is_a_legend) said on 21st February 2014, 0:23

    6 months to downfall countdown stars now…

  9. F1 fan ny said on 21st February 2014, 2:47

    What a load of waffle on both sides. The reality is that both parties were engaged in a disingenuous deal to the benefit of each individual. BE, whatever his method, is F1 and has provided us and the industry of F1 with the best possible offering we could dream of. I fear the reality of F1 without BE and understand that every facet of life encounters a being at the helm who has undertaken evils to provide the solution most acceptable to society. You want the truth, you can’t handle the truth, you need me on that wall. BE should be praised for sticking his frail aged neck on the line for the purity of the sport that we worship as the pinnacle of man and machine.

    Careful what you wish for, once BE is gone our sport will quickly descend into a corporate mystery excluding the fans from its operations.

  10. Shelly Longswirth said on 21st February 2014, 17:06

    How can Mr. Ecclestone get away with so much? Because he is rich?

    • What’s he gotten away with?

      He didn’t try to undervalue the shares that were sold, and yet he’s still facing trial in criminal court in Germany for illegally bribing (allegedly) Gribkowsky!

  11. The one crappy thing Ecclestone did that really got under my skin was force out Adam Parr, who he obviously viewed as a threat – if not equal in magnitude to Gribkowsky, worrisome enough for Bernie to threaten to destroy Sir Frank Williams’ team if Parr continued as CEO…

  12. Significantly, as far as Ecclestone’s forthcoming case in Germany is concerned, the judge doubted this version of events:

    Good thing that Bernie’s guilt won’t be decided based upon the credulity of a glorified British magistrate who’s neither informed about nor qualified to make judgments concerning alleged criminal liability under German law…

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