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Williams and McLaren accused Ecclestone of controlling family trust

NEWS STORY
06/01/2014

In 2011 I wrote a news story for the Daily Telegraph sports section which has since been followed up all over the world. It contained Bernie Ecclestone's admission that £26.9m ($44m) had been paid by him and his Bambino family trust to former banker Gerhard Gribkowsky. Ecclestone said the money had been paid because Gribkowsky threatened to tell the UK tax authorities that he controlled the trust – an allegation which could have cost him hundreds of millions of Pounds. Now, in another article for the Telegraph, I reveal that this was not the first time this allegation had been made. It had previously come from the well-known duo of Williams and McLaren.

The accusation by Williams and McLaren was made in legal action they took in 2004 against their former lawyers, Linklaters and Baker & McKenzie. The litigation concerned a stake in F1 that the teams believed they were entitled to get in return for agreeing to stay in the sport by signing the 1998 Concorde Agreement.

Williams and McLaren were the last teams to sign the 1998 Concorde Agreement and were persuaded to do so on the promise of receiving a share in the flotation or sale of F1. After a proposed flotation was abandoned, Bambino sold stakes in F1's holding company SLEC but the two teams did not receive a penny from it. They claimed that the law firms acted negligently in negotiating and preparing their contracts which are understood to have referred to Formula One Holdings (FOH) rather than its parent company SLEC.

Williams and McLaren didn't just put pressure on their former lawyers but also on Ecclestone himself. This came to light in the recent court case brought against Ecclestone by German media rights firm Constantin Medien. It claims that the £26.9m payment to Gribkowsky was a bribe and that it lost out as a result.

Gribkowsky was chief risk officer for German bank BayernLB which owned a 47.2% stake in F1. It was sold in 2006 to the private equity firm CVC and the £26.9m was paid to Gribkowsky after that. Constantin believes that he got the money in return for steering the sale to CVC which it claims was Ecclestone's preferred bidder as it had agreed to retain him as F1's boss. CVC paid £497m ($814m) but Constantin says other buyers would have paid more and it took legal action as it had an agreement to share in the proceeds if the stake sold for more than £672m ($1.1bn).

In contrast, Ecclestone says that the money was paid after Gribkowsky threatened to tell the UK tax authorities that he controlled Bambino. It would have been a damaging claim to make because the trust is based offshore whereas Ecclestone is a UK resident. Accordingly, Ecclestone would be liable to pay tax on the estimated £2.4bn ($4bn) in the trust if he was found to be in control of it which he strongly denies.

Ecclestone made this point in the witness statement he gave in the 2004 legal action brought by Williams and McLaren. This was read out in court by Constantin's barrister Philip Marshall. It said 'I have been told by solicitors acting for Linklaters in this matter that the claimants,' and that's referring to Williams and McLaren, 'through their statement of case and their witness statements allege that I controlled at all material times,' and they're saying from 1997 and 1998 and thereafter, 'the Ecclestone family trust and/or SLEC and that the separation which I maintain from the trust and those advising the trust and SLEC was, in effect, a charade or window dressing. I can confirm that such suggestions or allegations are a nonsense.'"

Ecclestone's view was supported by a witness statement from Gribkowsky and, as I point out in the Telegraph, this is one of Constantin's key pieces of evidence. Gribkowsky's witness statement was also read out by Marshall and it said "I have never seen any sign or indication that Mr Ecclestone exerts any control or influence, or has attempted to exert any control or influence, over... the trustees of the Ecclestone family trust."

On hearing Gribkowsky's witness statement the judge, Mr Justice Newey, said last month: "to think you can get $40-something million in circumstances where a few months earlier you have said exactly the contrary is not easy." However, Gribkowsky's witness statement has been called into question by none other than his own lawyer Daniel Amelung who recently told the BBC's Newsnight programme "it's an open secret that Ecclestone is the deciding man behind Bambino."

Not only is this a repetition of the allegation which underpins Ecclestone's argument but it also shows how meaningless Gribkowsky's witness statement is as it said the opposite to this. No doubt this is one of the conundrums occupying Mr Justice Newey. He is currently deliberating over the judgement in the trial and a verdict is expected in the next two months.

Christian Sylt:

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1. Posted by blackdog, 07/01/2014 13:04

"Somebody has been very badly advized!
First, the FIA and Bernie had, I am sure, power to veto any potential buyer of the bank's shares that they found to be unacceptable.
Second, I don't believe anyone, (any buyer of shares in the commercial rights), in their right mind, would want get rid of Bernie from the management of the sport. He has made it what it is today, almost single handedly, and generating billions in revenue in the process.
Last, if Gribkowsky did threaten to expose Bernie as the alleged real decider behind Bambino, Go ahead!
Prove it! I would have just told Gribkowsky to f off and gone to the bank's board to make an official complaint about his behaviour.
Remember, the bank just wanted to sell off the shares, and apparently were delighted with the price CVC offered.
Why they were so desperate to sell, God only knows. They would have been much better off hanging on to what has turned out to be a very fine investment, certainly from CVC's point of view.
I wonder what the bank has invested in since the sale, that has produced better returns?
My main question is as follows: Bernie is one of the smartest, and most successful businessmen in existence, so, How on earth did he ever get himself into this unholy mess???
If, for any reason, you did have to pay someone under the table, you would not make the payment so openly from the account of your family trust. It would be paid offshore to a company with nominees acting for the person you are paying. It would never be direct and there would not be any paperwork.
I mean come on. Wake the F up!
Gribkowsky showed what a cretin he is by getting done for the tax he owed on money he received which nobody should ever have known about. Generally I feel that one can substitute the b in bankers for a w.
They are either idiots, or crooks, or both."

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