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Over the past three days the Times and the Sunday Times have written two articles about the recent lawsuit filed in the UK against Formula One boss Bernie Ecclestone. He has been accused of undervaluing a stake in F1 when it was sold by German bank BayernLB to current owner, private equity firm CVC in 2006. However, strangely, both articles fail to even give passing mention to the fact that just last month BayernLB's chief financial officer Stephan Winkelmeier confirmed that the stake was sold at "a price that was in line with expectations." Pitpass' business editor Christian Sylt now knows the reason for this being left out of the Times coverage.
The most recent article in the Times was published on Sunday and was written by Helen Power, a reporter with a background covering mergers and acquisitions, but little experience in writing about the arcane business behind F1. She was assisted in writing her report by Kevin Eason, the Times' motor racing correspondent, and although he isn't a business reporter, he really should know better.
The premise behind their article is that F1's majority owner CVC could get dragged into the legal proceedings in the UK about the sale of F1. Power and Eason managed to get quotes from a source close to the company which filed the lawsuit but they didn't include the comments published at the end of August (http://www.pitpass.com/44579-F1-was-not-sold-for-less-than-expected-says-BayernLB) which deal a deadly blow to the legal proceedings.
Stephan Winkelmeier is one of the most senior bosses at BayernLB and readers will have to forgive Pitpass for harping on about his comments. The reason we have done this is that they effectively invalidate the key allegations in the UK lawsuit as well as one going on in Germany. Together these lawsuits have been occupying most of the column inches written about F1's off-track action since the start of this year and this is why the comments are crucial.
To recap in very simple terms, in the UK court case Ecclestone has been accused of undervaluing F1 when it was sold to BayernLB in 2006. In the German court case Ecclestone has been accused of paying BayernLB's former risk manager Gerhard Gribkowsky a bribe in connection with the sale of F1 in 2006. According to the Financial Times and the Times/Sunday Times, several of CVC's investors are putting pressure on it as a result of these lawsuits. So how are Winkelmeier's comments relevant?
Winkelmeier said that "the sale of the Formula 1 stake has of course been checked by both the management board and the supervisory board of the bank, through an internal revision as well as an external revision by auditors. So far those checks have not revealed any problems and have shown that the sale was carried out properly, in accordance with the bank's regulations and with a price that was in line with expectations."
Clearly, if the sale was carried out "properly, in accordance with the bank's regulations," a bribe cannot have been paid in connection with it. This takes care of the proceedings in Germany and it explains why bribery charges against Gribkowsky are expected to be dropped. If this happens then the accusations that Ecclestone paid him a bribe would also be dropped and some publications will have to tuck into a healthy portion of humble pie.
Likewise, if BayernLB's F1 shares were sold, as the bank says they were, for "a price that was in line with expectations," it is hard to see how they could have been undervalued. This takes care of the UK lawsuit and the possibility of CVC being dragged into it as Power and Eason claim. Of course, the comments from Winkelmeier don't just put to rest the two allegations in the legal cases, they also show that there is no substance to the concerns of CVC's investors.
Pitpass is certain that Ecclestone has spotted the Times' decision not to cover Winkelmeier's quotes and it is safe to say that he isn't impressed. So why did the newspaper decide to leave them out? Power said yesterday: "I hadn't seen those comments from Bayern LB, but I would certainly have included them had I known about them."
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