Formula 1 chief Bernie Ecclestone has been accused of striking a “corrupt bargain” in a bid to maintain his grip on the sport, at the start of a hearing in London’s High Court last week.
A German media group, Constantin Medien, which claims it lost out in a deal to sell the Formula 1 group, has launched legal action against the 83-year-old British billionaire and three other defendants. The charges brought against him say in 2005 he paid US$44 million in various bribes to a German banker to ‘engineer’ the sale of Formula 1 to the current owners CVC Capital Partners. The court was told Ecclestone entered into the “corrupt agreement” with a banker to facilitate the sale of the Formula 1 group to a buyer ‘chosen’ by him – Constantin is seeking more than $100 million in damages.
Ecclestone’s legal council said the claim lacked any merit and in short, was an artificial, manufactured, complaint failing on each of its elements – there was no conspiracy and no intent to injure Constantin or have suffered any loss.
Gerhard Gribkowsky, formerly the chief risk officer of German bank BayernLB, was jailed for eight and a half years by a Munich court for receiving corrupt payments. Ecclestone does not deny paying Gribkowsky but insists he was the victim of a blackmail plot hatched by the German banker. Ecclestone told the court that he felt forced to make payments to the banker because the banker led him to believe that he would create problems with the tax authorities.
Constantin Medien owned an interest in Formula 1 via BayernLB, which held 47 per cent of the stock, and alleges that the US$820 million (A$864.9 million) price paid by CVC was intentionally undervalued because within months of the deal, the value of CVC’s stake had reportedly jumped to US$2.8 billion (A$3 billion), making it one of the most profitable deals in the private equity group’s history.
In the meantime, Swiss prosecutors also opened an investigation following a complaint by the company Constantin Medien. The decision to open a probe in no way implies any wrongdoing on Swiss soil, however it is to establish whether the facts constitute an offence under Swiss criminal law.
CVC Capital Partners are reportedly seeking a valuation of more than US$10 Billion if the renewed plans to float Formula 1 go ahead in the near future.