Formula One: Ecclestone accused over $100m corrupt deal

Formula One: Ecclestone accused over $100m corrupt deal

The head of Formula One has been accused of making a ‘corrupt’ deal that has cost a German media company $100m in a court case in London, reports Reuters.

The case involves Constantin Medien AG, a German media group, and Bernie Ecclestone, the President and CEO of Formula One Management, alongside three other defendants; Stephen Mullens, Bambino Holdings Limited and Gerhard Gribkowsky.

Constantin Medien were formerly shareholders in the F1 group of companies, and claim in their lawsuit that they were deprived around $100m in income when Mr Ecclestone sold the group to CVC Capital Partners in 2005.

More specifically, Constantin Medien claim that Mr Ecclestone paid bribes to investment banker, Mr Gribkowsky, to entice him into undervaluing the company.

The third and fourth defendants in the case are Bambino Holdings, a vehicle used by the Ecclestone family for investment purposes, and Stephen Mullens, Mr Ecclestone’s lawyer at the time of the transaction.

The case against Mr Ecclestone has been supported by the arrest of Mr Gribkowsky earlier in 2013 on charges of corruption, tax evasion and breaches of trust, for which he was sentenced to eight-and-a-half years in prison in June.

Mr Ecclestone paid over £28m to Mr Gribkowsky in the wake of the sale of Formula 1, although Mr Ecclestone denies that the payments were part of a bribe and instead claims they were made in a bid to avoid a tax investigation in the UK.

In a case that began on Tuesday, Constantin Medien were told that the fact that Mr Gribkowsky was sentenced in Germany would not suffice as evidence of wrongdoing, and that they would need to prove their case in court.

The company alleges that the bribes paid to Mr Gribkowsky were to ensure that the sale proceeded at a reduced price, and that at the end of the sale Mr Ecclestone would retain his position as the head of Formula 1.

“We see the transaction as being significantly weighted for the benefit of Mr Ecclestone and Bambino, and significantly to the detriment of BayernLB and those who had an interest (in the sale of its stake),” said Philip Marshall, lead Counsel for Constantin Medien.

Mr Ecclestone will give evidence next week.

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