Mercedes £80m euro sponsorship a fraud?

14/12/2009

The German consumer products group Henkel - which owns such well known brands as Persil, Loctite and Schwarzkopf haircare - has rejected any responsibility for a 90 million euro (£80 million) sponsorship deal with the Mercedes Grand Prix team, claiming that the deal was agreed by former employee without the company's authorisation or knowledge.

A statement issued by the German company this afternoon reads as follows:

"A fraud case, in which the Düsseldorf Prosecutor's Office is investigating the previously convicted fraudster Willy Luchs and a former Henkel employee, has greater scope than originally believed.

Brawn GP has concluded a 3-year sponsorship agreement for 90 million euros with the Dutch letterbox company operated by the convicted fraudster Willy Luchs. A former Henkel employee is alleged to have entered into a guarantee from Henkel to support such sponsorship agreement.

Additionally, it is totally unprecedented to believe that an employee at the 5th management level of a DAX-listed company would have been authorised to either negotiate or sign agreements of such magnitude and commercial profile without involving the company's senior management, Finance, Marketing or Legal departments. The appropriate level of diligence does not appear to have been undertaken by Brawn GP as even a simple "Google" search would have revealed Willy Luchs' criminal past.

Following an enquiry by Daimler on September 28, Henkel informed Daimler that a Formula 1 sponsorship agreement with Brawn GP neither exists nor was planned.

On October 28, after Henkel was informed by the Dusseldorf Prosecutor's Office and the fraudulent acts became apparent, it immediately notified Daimler of the acts of Willy Luchs and the former Henkel employee. Henkel fully supports the Dusseldorf Prosecutor's Office in their investigations.

On November 13, Brawn GP demanded payment from Henkel with a fixed deadline and with the threat of legal action. To safeguard its legitimate interests, on November 19 Henkel began court proceedings against Brawn GP in the Dusseldorf District Court in order for the Court to determine that there are no obligations whatsoever on Henkel on the basis of the existing documents. Henkel will not accept a fraudulent sponsorship arrangement with Brawn GP, based on clear and obvious fraudulent acts."

The Brackley-based outfit has yet to comment on the situation. However, in late August, Nick Fry (pictured) said that new sponsorship deals were in place for the next three years, claiming that there was a "log jam" of deals on offer. "We've signed some nice contracts," he said.