At the moment three key legal cases involving Bernie Ecclestone are in progress and one of the consequences of this is that arguments in some can be used in others. They can of course be used both in defence or opposition depending on the situation. As none of the cases has yet gone to trial this process has yet to begin in earnest but the filing of key documents gives an insight into what could be in store.
The best place to start is with a brief overview of the three cases. The first and most widely-reported is in Germany where Ecclestone has been charged with paying a bribe to former banker Gerhard Gribkowsky. German prosecutors believe that Ecclestone and his family trust paid $44m to Gribkowsky so that he would agree to sell a 47.2% stake in F1 to the sport's current owner, the private equity firm CVC. The stake was owned by German bank BayernLB and although it employed Gribkowsky he didn't tell his bosses that he had received the $44m.
What BayernLB did know was that under the terms of the deal, Ecclestone received 5% of the sale proceeds as a commission. As Pitpass' business editor Christian Sylt has revealed, BayernLB agreed to give this 5% to Ecclestone in return for him providing a personal guarantee of $100m that F1 would not collapse. F1 was sold to CVC in 2006 and at that time there was a risk that the car manufacturers involved with the sport would leave due to a pay dispute. CVC asked for the guarantee and BayernLB refused to provide it which is why Ecclestone stepped in. The 5% came to $41m and the German prosecutors believe that this money was used to cover Eccletone's share of the alleged bribe to Gribkowsky.
The prosecutors claim that Ecclestone wanted to ensure that F1 was sold to CVC because it had agreed to retain him as the boss of the sport. He denies this and in July 2011 revealed to Sylt that Gribkowsky threatened to make false allegations about his tax affairs if the money was not paid. In June 2012 Gribkowsky was sentenced to eight and a half years in prison for receiving the alleged bribe and in May this year the prosecutors charged Ecclestone with paying it. A German judge will soon decide whether to bring the case against him to trial.
The second legal case which was put in motion is based on some of the claims which came to light during the German investigation into Gribkowsky. Unlike the criminal charges against Ecclestone in Germany, this is a civil case in the UK and the lawsuit against him has been filed by media company Constantin Medien. It had an agreement with BayernLB that it would get a share of the money if the bank's F1 stake was sold for more than $1bn. However, in the end, BayernLB got $814m from the sale to CVC so Constantin Medien did not get a share of the money.
In its lawsuit, Constantin claims that if Ecclestone had not bribed Gribkowsky to sell BayernLB's stake in F1 to CVC it "would have been sold to CVC or another purchaser for full value in or about January 2006. Alternatively, if the BayernLB Holding had not been sold in or about January 2006, it would have been sold for at least $2.8 billion prior to 1 January 2008." Constantin gives no evidence that there was a bidder which would have made an offer of $2.8bn and had the money in place to do so. In fact, although there were multiple bidders, none of them made an offer which was higher than the amount paid by CVC. Nevertheless, the lawsuit claims that if BayernLB's stake had been sold for $2.8bn "Constantin would have received at least $171 million" and this is the amount it is claiming in damages.
The third case is going ahead in the New York Supreme Court and has been brought by investment firm Bluewaters against BayernLB, CVC, Ecclestone and Gribkowsky amongst others. Bluewaters was one of the other bidders for F1 and its offer came to $1bn, which was less than the amount paid by CVC. However, its lawsuit claims that Bluewaters sent a letter to Gribkowsky stating that it was "prepared to pay 10 percent... above any genuine bona-fide offer put forward by any other accredited buyer." Bluewaters claims that its offer was ignored by Gribkowsky because he had been bribed by Ecclestone to sell to CVC. It then makes the leap that CVC's profits from F1 therefore "rightfully belong to Bluewaters and its financial backers." This is the basis for its claim of $650m in damages.
Bluewaters is suing Ecclestone for paying the alleged bribe, Gribkowsky for receiving it, CVC because it provided the money which was used and BayernLB for allegedly knowing about the bribe. This case has not yet come to trial either but there have already been several hearings about it in New York. One of the judge's key concerns is a point which has been used by several of the defendants to explain why the case should not go ahead. In a nutshell, it concerns the question of why the case should be heard in New York when the alleged bribe took place in Europe where both Ecclestone and Gribkowsky are based.
In a nutshell, Bluewaters claims that the case should be heard in New York because the alleged bribe was paid in Dollars and the vast majority of payments in that currency have to go through banks in the Big Apple. On 17 July this year Bluewaters' legal representative Kent Yalowitz said in court that "the clearing house interbank payment system network handles 95 percent of the international transfers made in dollars transferring an average of $750 billion dollars per day, 95 percent of the international transfers. These funds are transferred through participating banks located in New York."
The $44m was paid to Gribkowsky by bank transfer rather than cash so it would be incredibly difficult to prove that this money specifically went through banks in New York. Bluewaters' argument is that it is highly likely that the $44m went through New York because 95% of international Dollar transactions do. It argues that the case should therefore go ahead in New York. BayernLB disagrees that the case should go ahead in New York and said in its defence that "this litigation is more suited for Europe."
However, it seems that a very similar argument to the one which could land BayernLB in court in New York is being used over in the German case to ultimately benefit the bank.
The indictment against Ecclestone in Germany states that "the payments to Dr. Gribkowsky were financed largely out of the commission of USD 41 million already paid to the Accused and consequently by BayernLB, without its decision-making bodies being aware of this due to misrepresentation of the facts on the part of Dr. Gribkowsky." In summary, the German prosecutors' claim is that the $41m commission paid by BayernLB to Ecclestone was used to pay the alleged bribe to Gribkowsky meaning that the bank is due this money in damages since it was used for an illegal purpose.
Just as it would be incredibly difficult to prove whether the money received by Gribkowsky specifically went through New York, it would be incredibly difficult to prove that the $41m received by Ecclestone was the same money which was used to finance his share of the $44m alleged bribe. The prosecutors allege that it is incredibly likely that the same money was used and, likewise, Bluewaters claims it is incredibly likely that the payment to Gribkowsky went through New York because it was paid in Dollars. Let's look at this in some more detail.
Ecclestone received $41m from BayernLB and this money landed in his bank account along with the other millions (or even billions) which were already in there. So how could the German prosecutors prove their allegation that this specific $41m was later paid by Ecclestone to Gribkowsky?
If the payment had been made in cash the serial numbers on the banknotes could be used to prove that the same money received by Ecclestone from BayernLB was then paid to Gribkowsky. However, the money was paid to Gribkowsky by bank transfer so it rules that out.