Formula 1 supremo Bernie Ecclestone may have won the lawsuit filed by German media company Constantin Medien, yet it was more of a bitter sweet victory considering that the London High Court judge deemed Ecclestone of paying $44 million as bribe.
Constantin Medien had an agreement with German bank BayernLB, entitling it to 10% commission if the shares of the F1 Group were sold above a certain threshold which was not reached. This wasn't a big issue until the bank's chief risk officer, Gerhard Gribkowsky was found guilty of receiving a bribe involving the same sale.
With the revelation of this story, the German media company filed a case in London High court, claiming that the sale to CVC was agreed for an undervalued price of €840m, "without the normal and proper process." Consequently, they were seeking up to $144 million in compensation.
The court, however, cleared Ecclestone and three other defendants by announcing that there was no financial loss to the German company.
"No loss to Constantin has been shown to have been caused by the corrupt arrangement," the judge said. "That fact is fatal to the claim,” declared Mr Justice Newey, the London High Court judge.
But more importantly, the court deemed Ecclestone’s $44 payment to German banker Dr Gribkowsky as bribe and added that he was not “reliable or truthful” in the London case.
“The payments were a bribe,’ The judge declared. “They were made because Mr Ecclestone had entered into a corrupt agreement with Dr Gribkowsky in May 2005 under which Dr Gribkowsky was to be rewarded for facilitating the sale of BLB's shares in the Formula One group to a buyer acceptable to Mr Ecclestone.”
“Mr Ecclestone's aim was to be rid of the banks. He was strongly averse to their involvement in the Formula One group and was keen that their shares should be transferred to someone more congenial to him."
“Mr Mullens was complicit in the corrupt arrangement, but [Ecclestone family trust] Bambino was not. The claim fails as against Bambino for that (as well as other) reasons."
Dr Gribkowsky has already admitted that he received a bribe from Bambino, the Ecclestone family trust, for ensuring the sale went according to Mr Ecclestone's plans. Ecclestone, however was adamant that the payments were not bribes, insisting that he was forced to do so after being blackmailed by the German banker over his tax affairs.
“I am aware that payments totalling approximately $22.7 million were made to Gribkowsky on my behalf between October and December 2007. I have very little recollection regarding any specific arrangements relating to these payments. I recall that at some stage Gribkowsky told me that he did not want a direct payment coming from me to him or for money to come to him from the UK. For this reason, I asked Flavio Briatore, a friend and business associate who held funds outside the UK and who owed me some money at the time, to pay some money on my behalf to Gribkowsky.”
“I also recall that I had some contact with Andre Favre, a contact of mine in Switzerland, and that he assisted in arranging the payments. However, although I knew that payments were made on my behalf, I did not know any details about how they were made or see any documents that were drawn up in relation to the payments.”
Speaking in his defence to the BBC after the Judge said that he was not “reliable and truthful’, he said: “Let's assume I am a liar and let's assume I am unreliable.”
"I've run the sport for the last 30-odd years and nothing has changed. So if I was unreliable, and whatever, I have been lucky to have been as successful as we have been,” he added.
While this case was about determining whether the sale of the sport was undervalued or not, it preludes to a criminal case in April which is directly about whether Ecclestone paid a bribe to Dr Gribkowsky, who is currently in jail as part of his eight-and-a-half year sentence.
However, the German court is not dependent on the findings of the London High Court, nor there is any guarantee that it will follow suit.
"When we get to Munich it will be a different case," Bernie Ecclestone told the Financial Times.
Bernie Ecclestone, who has been managing Formula for the past four decades, deserves full credit for turning it into a multi-billion dollar sport that it is today. He recently stepped down from F1's holding company Delta Topco, but continues to run the sport on a day-to-day basis, albeit under the supervision of chairman Peter Brabeck.
But if he were to be found guilty in the April case, he could face a prison sentence that could, unfortunately, end his role as F1's supreme head.