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Yesterday Pitpass featured a preview of the day's upcoming events in the trial of F1's former chairman Gerhard Gribkowsky who was expected to talk for the first time about why he received £27.5m from the sport's boss Bernie Ecclestone and his family trust.
We predicted that "the only way this strategy could be of any use to Gribkowsky would be if he made a full confession so the verdict of the case could come sooner than expected." We were bang on the money as this is precisely what happened and a verdict in the trial is due next week. We also predicted the court will conclude that the money Gribkowsky received was a bribe and his testimony yesterday confirmed this. As an article in today's Telegraph, written by Pitpass' business editor Christian Sylt reveals, Gribkowsky's testimony also boosted the chances that he will be on the receiving end of another lawsuit - this time from Ecclestone himself.
To recap, Gribkowsky was arrested in January last year after investigators discovered he received £27.5m in 2006 and 2007 whilst working for BayernLB, the bank which owned a 47.2% stake in F1. The money had been paid into an account in Austria where it was taxed at a lower rate than it would be if it had been banked in Gribkowsky's home of Germany.
This led prosecutors to charge him with tax-evasion and, as he never told BayernLB that he received the money, he was also charged with breach of trust. He was accused of receiving a bribe because the money was paid by Ecclestone and his family trust and prosecutors believed that Gribkowsky got it to encourage him to sell BayernLB's F1 stake to the sport's current owner, the private equity firm CVC, in 2006. The prosecutors claimed that CVC was Ecclestone's preferred buyer because it agreed to retain him as F1's boss. They added that BayernLB incurred damages as a result of this since the bank paid Ecclestone £25.9m from the sale proceeds they claimed that the reason he wanted this was to cover the cost of the payment to Gribkowsky.
Ecclestone said that, in fact, the £27.5m was paid by him and Bambino because Gribkowsky threatened to contact the UK's tax authority and make the false accusation that the F1 boss controls the trust. Bambino needs to be independent from Ecclestone for tax reasons and if it wasn't it could have landed him with a £1bn tax bill so suggesting that he was in control would have been a serious threat indeed. Ecclestone explained that he got the £25.9m fee from the deal because he facilitated the sale to CVC and also gave BayernLB "an indemnity for an awful lot of money that all the [F1] accounts were in good order because the bank would not give them." At the time of the sale to CVC, F1 was in a state of disarray with teams threatening to leave the sport but Ecclestone says he vouched for its health. Gribkowsky's statement yesterday contradicted all this.
He told the Munich court that the allegations made against him by the prosecutors are "essentially true" and added that he was paid the money so that he would wave through the sale to CVC. "I allowed myself to be bribed," said Gribkowsky adding that at a meeting in May 2005, Ecclestone told him "if you help me to sell Formula 1, I will employ you as a consultant." Gribkowsky said he wanted $50m and was only expecting to get a fraction of it as he claimed in court that "$10 million would be more normal." However, he got nearly the full amount.
Earlier in the year, at a luxurious St Tropez house, Ecclestone had been introduced to CVC co-founder Donald Mackenzie who indicated that the private equity firm wanted to take over F1. Gribkowsky says that after the meeting in May Ecclestone informed him about CVC's interest and on 9 September it made its first written offer followed by its second ten days later. CVC paid £527m ($839m) for BayernLB's shares and when the sale was finalised Gribkowsky got a consultancy contract. He received the £27.5m under this agreement but said in court that he never actually worked as a consultant.
Gribkowsky added that Ecclestone originally asked for a £62.6m ($100m) fee for his role in setting up the sale but agreed to reduce the amount to in negotiations which is why he ended up getting £25.9m. Gribkowsky told the court that he agreed to Ecclestone's fee despite knowing that he had the power to reject it completely. "With hindsight, I know now that I should have said no to his demands," he explained.
It seemed Gribkowsky had needed to be convinced of his own guilt. "It took me a long time to come to terms with what I have done and to admit even to myself: Yes, it was bribery and yes, I should have paid tax," he said adding "still today I have troubles accepting this as a reality." This isn't as strange as it may seem.
In a nutshell, Gribkowsky said that Ecclestone told him if he agreed to sell to CVC the shares in F1 owned by BayernLB, he would get a £27.5m pay-off. Ecclestone then demanded £25.9m from BayernLB for setting up the sale to CVC. This led to money connected to the sale moving from BayernLB to Ecclestone and then to Gribkowsky. Once Gribkowsky agreed to take the £27.5m from Ecclestone it could be said that he was no longer acting on behalf of the bank but for Ecclestone and it is this which gives rise to the allegation of bribery.
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