Ecclestone hires a German lawyer... according to the Germans

12/03/2011

It has been a while since there we last heard any news in the papers about Gerhard Gribkowsky, the former chairman of F1's commercial rights holding company SLEC, who is currently in prison in Munich. Gribkowsky has been in a cell since January when he was arrested on suspicion of taking a $50m kickback for allegedly undervaluing a 47.2% stake in SLEC which his former employer, German bank BayernLB, sold to F1's current owners CVC in 2006.

Over the past two months the German media has been awash with speculation that F1's boss Bernie Ecclestone paid the $50m to Gribkowsky in 2006 and 2007 in return for him undervaluing the shares. Pitpass' business editor Chris Sylt has debunked this theory and concluded that it was as good as impossible that the shares were undervalued.

We are now more than two months into Gribkowsky's imprisonment and, surprise surprise, still no one has been arrested for paying the alleged bribe to undervalue the shares. Last month Sky News' business editor Mark Kleinman reported that an investigation into the circumstances surrounding the sale had been launched by CVC and SLEC's ultimate parent company Delta Topco.

Kleinman is an extremely skilled journalist who rose to become City editor of the Sunday Telegraph. He has not written a great deal about F1 but has covered several of the people at the periphery of the sport's management such as Sir Martin Sorrell who Kleinman once said "can legitimately claim to have a more comprehensive view of the consumer economy than any other company boss in Britain".

Sorrell is chief executive of the world's biggest advertising group WPP and is also one of Delta Topco's independent non-executive directors. Sorrell doesn't have a high profile in F1 but famously clashed with Ecclestone over his comments that Hitler could "get things done" and that former Renault F1 team principal should not have been banned for life for allegedly fixing the result of the 2008 Singapore Grand Prix.

In short, the news of the investigation into the sale of SLEC came from a credible source. Initially it was thought that the investigation suggested there were suspicions that money had indeed been paid for undervaluing the shares. However, Pitpass then revealed that the F1 Group is a client of the two firms handling the investigation, Freshfields and Ernst & Young, so their appointment had clearly not been demanded by an external body. In light of this news. the investigation was considered by some to be CVC putting a stamp on its claim that it "has no knowledge of, nor any involvement in, any payment to Mr Gribkowsky or anyone connected with him in relation to CVC's acquisition of Formula One".

Ernst & Young audits the accounts of the F1 Group so in the incredibly unlikely event that $50m was paid for undervaluing the shares it would have noticed this when the money was originally paid. Presumably Ernst & Young was satisfied then with the reason for the payment so what would be the point of getting it to go back over the transactions now?

Sky News claimed that Ernst & Young and Freshfields had been instructed to report back "within a matter of weeks," but two days after the report, Ecclestone told Sylt that in fact there would be no investigation. Lo and behold, four weeks later and no news has come of the investigation so it looks like Ecclestone was correct yet again.

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