Bernie Ecclestone, the British businessman boss of Formula 1 has been formally charged by German prosecutors of bribery, on the sale of commercial rights of Formula 1, a transaction that took place back in 2005 between BayernLB bank and investment fund CVC Partners.
“I have just spoken to my lawyers and they have received an indictment. It’s being translated into English,” said 82-year old Ecclestone.
Ecclestone’s lawyers deny the allegations and will formulate a written response, which will be sent to the court in Munich. The court will study both prosecution’s arguments and those of defense, then decide if it will start hearing the case.
According to the Munich Prosecutor office, Ecclestone would have offered a $44 million (€35 million) bribe to a senior official of BayernLB, to facilitate the sale of a 48 percent stake of the commercial rights of Formula 1, located in the bank’s portfolio, to the British investment fund CVC Partners.
Gerhard Gribkowsky, a former employee of BayernLB, was sentenced in June 2012 to eight and a half years in prison for corruption, embezzlement and tax evasion. After a year and a half detention and eight months process, Gribkowsky admitted in court that he received money to convince the state owned bank where he was employed to accept the sale to CVC Partners.
BayernLB had come into possession of the shares after the 2002 bankruptcy of Leo Kirch’s media group which owned the commercial rights of the Formula 1. The bank tried to sell shares at the best price to recover as much as it could of the money advanced to the Kirch Group. The value of the transaction completed in November 2005 with CVC was $839 million.
The German bank calculated that the loss from the transaction which took place in 2005 amounts to $400 million, because its employee undervalued the shares.
In November 2011, Ecclestone admitted he gave money to Gribkowsky, but not as a bribe, but because the banker would have blackmailed him with false disclosures in UK on non-payment of taxes.
In total, CVC has paid over $1.7 billion to become the main owner of the Formula One Group, with shares taken from Bernie Ecclestone and the BayernLB. After this transaction, Bernie Eecclestone was retained as manager of F1’s commercial rights, as president and CEO of the Formula One Group.
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