Ecclestone defends F1 sale

Formula One supremo Bernie Ecclestone today reiterated the sale of the sport that has led to legal cases on two different fronts was above board.

Ecclestone spent around six hours, over the course of two days, on the witness stand this week at the District Court in Munich giving evidence in the trial of Gerhard Gribkowsky.

Gribkowsky, former chief risk officer of state-backed bank BayernLB and chairman of F1 holding company SLEC, is on trial for breach of a former employer’s trust, being in receipt of corrupt payments and tax evasion. He denies the charges.

In 2005, BayernLB sold their 47.2% stake in F1 to current owners CVC Capital Partners, a deal which has become the subject of intense scrutiny.

Ecclestone claimed in court this week he was “shaken down” by Gribkowsky, leading him and family trust Bambino Holdings to pay a combined £27.5million to ensure he would stay silent with regard to the state of his finances.

The 81-year-old, F1’s chief executive, feared Gribkowsky would make “false claims” to Her Majesty’s Revenue & Customs of his involvement in Bambino.

In order to avoid the likelihood of an investigation by HMRC and a potential tax bill “in excess of £2billion” according to Ecclestone, he felt it wiser, and cheaper, to keep Gribkowsky quiet.

Ecclestone has admitted to paying £14.4m to an Austrian account in Gribkowsky’s name, with Bambino the remaining £13.1m via mailbox companies in Mauritius and the British Virgin Islands.

Following the sale of F1, Ecclestone received £25.9m for what he claims was a five per cent commission.

The issue is further complicated by the fact that at the same time as the trial in Germany, Ecclestone faces a potential civil case being pursued in London’s High Court.

Lawyers for Constantin Medien, which is suing Ecclestone over the sale of F1, have claimed in a statement to have heard his evidence with “increasing incredulity”.

Constantin Medien once owned F1 under their former guise as EM.TV, only to falter, with their shares ultimately falling into the hands of three banks - BayernLB, JP Morgan and Lehman Brothers.

Keith Oliver, head of commercial fraud litigation at Peters and Peters, added: “It truly beggars belief Mr Ecclestone could have entered into the bizarre arrangements he has described in his evidence to the court in Munich.

“Constantin maintain the F1 rights were sold at a gross undervalue – their losses are at least 171m US dollars (£106m) – and the High Court proceedings in London for conspiracy to defraud will continue to be vigorously pursued.”

Ecclestone maintains he has nothing to worry about. He said today: “Somebody thought the shares were sold cheap. That’s what it’s all about.

“But all the banks and everybody who has been involved said the shares were sold at a very good price.”

Ecclestone has also brushed off concerns HMRC will also now pursue him, adding: “I’m not worried, not at all.

“At the beginning there was a problem because I didn’t know how the trust was set up.

“But now we have clearance from the Revenue on everything, so we know it’s straightforward, although at the time I didn’t know, and that’s what concerned me.

“We had clearance in 2008, but when all this happened we didn’t have any clearance, and it could have caused unnecessary problems.”

Asked whether HMRC had grounds to re-open the case, a determined Ecclestone said: “No, no, no, no.”

Ecclestone is also confident the case against Gribkowsky is heading in the right direction.

“We’re getting to know the truth now. Before there was a lot of speculation about the facts,” said Ecclestone.

“There are 40 witnesses, and I think each one of those will say the same thing.”