Justice Guy Newey of the London High Court ruled that Formula One founder and owner Bernie Ecclestone bribed a German banker as part of a “corrupt agreement.” The business deal that included the bribe is related to a 2005 sale of a stake in Formula One. Mr. Justice Newey however, cleared Ecclestone of a multimillion dollar fraud charge. The trial originated when the German media company, Constantin Medien, sought damages of over $100 million from Ecclestone and his associates. Meanwhile, Ecclestone also faces trial in Germany this April for bribing a public official. Now that Ecclestone has the British court case off of his lap, he prepares for what is hoped to be the final hearing.
Constantin Medien alleged that Formula One Ecclestone, along with German banker Gerhard Gribkowsky of BayernLB, intentionally undervalued the Formula One stake, owned in part by Constantin Medien at the time. The plaintiff charged that the deal cost the German media company a substantial amount of revenue. Gribkowsky was jailed by a Munich court in 2012 for tax evasion and corruption after he accepted a $44 million payment from Ecclestone after the Formula One sale.
Mr. Justice Newey rejected Ecclestone’s plea that the $44 million payment was an unrelated payment in response to Gribkowsky’s blackmail attempts. The bench replied flatly that the payments “were a bribe.” Mr. Justice Newey followed by saying that Ecclestone in fact helped facilitate the sale via his partnership with Gribkowsky. Finally, the bench questioned Ecclestone’s honesty, saying he is not a “reliable or truthful witness.”
Though he remains involved in daily operations at Formula One, Ecclestone had to relinquish some control pending the trials in the UK and Germany. There had been rumors that Justin King, former CEO of British supermarket chain, might replace him as CEO of Formula One. King is a known racing fan and his son Jordan is a professional driver. Jordan won British Formula 3, a junior series in 2013. According to recent reports, Ecclestone has not groomed any heir apparent. Now that Ecclestone has been cleared of fraud by the British court, he appears more prepared to stay in his Formula One lap of luxury, after he faces his final hearing in Germany.
Meanwhile, Mr. Justice Newey rejected much of Constantin’s version of events. He ruled that Ecclestone did not intentionally undervalue the company for personal gain. Rather, Ecclestone’s intent was to divorce his company from over-involvement from banks. Furthermore, the court ruled that Constantin suffered no financial loss from the “corrupt arrangement.” Gribkowsky described the inability to prove monetary loss as “fatal” to the plaintiff’s case. Constantin intends to appeal the decision.
The prosecution in Ecclestone’s bribery case in Germany will rely on much of the same evidence that the British prosecution used. This may be particularly bad news for the 83-year old Formula One owner, as should the German court find him guilty, he could face up to 10 years in jail. Last month the Daily Mail reported that Ecclestone could avoid jail time by way of a financial settlement. The article stated that unlike most countries, Germany allows some criminal cases to be settled financially. However, it is not feasible before the case starts, only afterward. A spokeswoman for the German court said that such a decision requires agreement between the defense, prosecution, and the court. The money would go to the treasury or to a charity.
The British court cleared Ecclestone of any criminal fraud. However when he faces the bribery charge in Germany, he may find the final lap to be more challenging.
By Ian Erickson