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Ecclestone says he is staying in F1's driving seat

NEWS STORY
30/12/2012

Back in October Pitpass described the saga surrounding Formula One's former chairman Gerhard Gribkowsky as "one of the longest-running scandals in the history of the sport." Two months later and the scandal shows little sign of abating with Ferrari chairman Luca di Montezemolo the latest to wade in with comment.

A brief summary is in order before we get to details of a new development, which comes in today's Telegraph courtesy of an article by Pitpass' business editor Christian Sylt. Gribkowsky became F1's chairman through his position as chief risk officer for state-owned German bank BayernLB which, until 2006, owned a 47.2% stake in the sport's former parent company SLEC Holdings. Gribkowsky was responsible for selling the bank's shares in SLEC and in 2006 F1's current controlling shareholder, the private equity firm CVC, paid £527m ($839m) for them.

For four years everything was rosy. BayernLB was happy with the amount it received and CVC was busy building up F1. Then, in early 2011 a dark cloud came along. Gribkowsky was arrested in January last year on suspicion of tax evasion, breach of trust and receiving a bribe. He was kept in Munich's notorious Stadelheim prison to prevent him from fleeing the country and in July 2011 he was formally charged with tax evasion, breach of trust and receiving a bribe. The catalyst for these charges was a payment to Gribkowsky of £27.5m which he received from Ecclestone and his family's Bambino trust during the two years following the sale to CVC. Prosecutors in Germany were convinced that this money was connected to the sale of F1.

The money was paid into accounts in Austria where it was taxed at a lower rate than in Germany where it should have been declared since Gribkowsky is resident there. This is why Gribkowsky was charged with tax evasion and he was also accused of breach of trust because he kept the payment secret from his bosses at BayernLB. Then comes the bribery charge.

As Pitpass revealed last year, the bribery charge was driven by the Munich prosecutors' belief that Gribkowsky received the money in return for him agreeing to sell to CVC which was allegedly Ecclestone's preferred choice because it wanted to retain him as F1's boss.

Ecclestone has disputed this version of events and last year revealed to Sylt "I had a contract with BayernLB so they couldn't have fired me. [CVC] bought the contract so they had to take me as well." He added that Bambino paid its share of the £27.5m because Gribkowsky was doing property consultancy for the trust. In July 2011 Ecclestone revealed to Sylt that he paid his share of the £27.5m because Gribkowsky threatened that if he did not get the money he would tell the UK's tax authority that the F1 boss controlled Bambino.

Ecclestone is adamant that there was no substance behind Gribkowsky's threat, however he says that he would have had to spend years in court defending it if the tax authority had been tipped off. At the time, it had not given its seal of approval to the trust and in the event that a court decision had gone against Ecclestone it would have been costly. Bambino has made around £2.4bn from stakes it has owned in F1 but no tax has been paid on the money since it is based in Liechtenstein. Ecclestone is a UK taxpayer so if he was found to be in control of the trust it could be declared a sham meaning that he would have to pay tax on the money which would leave him with a bill of around £1bn.

Ecclestone's testimony as a witness in court in November 2011 reflected the news revealed by Sylt four months earlier. However, despite Ecclestone testifying that Gribkowsky essentially blackmailed him, the court still ruled that the £27.5m was paid to Gribkowsky as an incentive to steer F1 to CVC. He was sentenced to eight and a half years in prison and since then there has been rampant speculation in the German press in particular that Ecclestone will be charged with having paid a bribe to Gribkowsky. German prosecutors are still investigating Ecclestone's role in the affair but he has not been charged with any wrongdoing.

One of the leading lights of the speculation about Ecclestone being charged has been the Suddeutsche Zeitung newspaper which has had reason to cover the subject in detail since it is published in Munich where the trial against Gribkowsky took place. Suddeutsche Zeitung reporter Klaus Ott has not just speculated that Ecclestone will be charged, he has said that the F1 boss can expect this to happen. Indeed, he even put a timeframe on when Ecclestone would be charged.

Ott got off to a flying start in June this year. Four days before Gribkowsky was found guilty on 27 June he wrote an article entitled 'Ecclestone in court! A trial of the Formula 1 boss is the cleanest solution'. It became a recurring theme which ultimately suggested it was all but inevitable that Ecclestone would be charged by the end of 2012.

The following month Ott wrote that "investigators want to bring the Formula 1 boss to court." This was repeated in August when he claimed that "after Gribkowsky, the prosecution also wants to bring Ecclestone to court." It didn't change in September with the claims that "the Briton has to expect a bribery charge" and that the prosecutor wants "to complete its investigation in autumn into bribes paid to the public official Gribkowsky and sue the racing boss." This was followed up on 26 November with Ott's allegation that "the indictment against Ecclestone is expected in the coming weeks." We are now more than one month down the road and still Ecclestone has not been charged so will it ever happen?

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