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Day two in court

NEWS STORY
25/10/2011

After the flurry of excitement on Monday when Formula One's former chairman Gerhard Gribkowsky appeared in court to confirm his name and job title, Wednesday marks the start of the donkey-work of the case. There will be a total of 26 days of hearings stretching into January so it's no surprise that they won't all be as newsworthy as the first. Flashpoints are expected to include F1 boss Bernie Ecclestone's evidence on 9 and 10 November and of course the conclusion in January. According to Pitpass' business editor Christian Sylt, on Wednesday it is expected that former F1 Group director Alexandra Irrgang will be giving evidence and her connection with the case is believed to be loose.

Gribkowsky has been charged with receiving $44m from Ecclestone for agreeing to sell the 47.2% stake in F1 owned by his former employer, German bank BayernLB, to the sport's current owner, private equity firm CVC, in 2006. Neither Ecclestone nor CVC has been charged and the F1 boss denies paying any bribe in connection with the sale of the sport. Instead, he says that Gribkowsky threatened to make false allegations to the UK tax authorities about him controlling his independent family trust.

As Pitpass reported earlier this month, one of Gribkowsky's female former colleagues has reportedly said when questioned by the German prosecutors that in 2004, on the instruction of BayernLB, she met a Heidelberg-based TV rights manager who had a legal battle with Ecclestone. The man gave her a letter which showed a connection between Ecclestone and his family trust. Gribkowsky's colleague is believed to have given the letter to him and it was then allegedly used against Ecclestone. The F1 boss reportedly told the prosecutors under questioning that he "was scared," by this so the evidence about the letter could be important to his argument that Gribkowsky threatened him.

This kind of claim has been made before in Tom Bower's error-ridden biography of Bernie Ecclestone, 'No Angel'. On page 290, Bower describes an alleged meeting between Gribkowsky and Wolfgang Eisele, a Heidelberg-based TV rights manager who had a legal battle with F1 (following an anti-competition complaint he made to the European Commission in 1997).

Bower alleges that "Eisele welcomed Gribkowsky's arrival at his home in Heidelberg as a chance for revenge. During their discussions, Eisele revealed that among his documents was a letter suggesting a close relationship between Ecclestone and Bambino, the supposedly independent family trust. 'Can we have it?' asked Gribkowsky excitedly. 'It'll cost €100,000 replied Eisele." Bower adds that Gribkowsky later left a copy of the letter on Ecclestone's desk which, led the F1 boss to say "this is unhelpful... it could show that I am Bambino's puppet."

In typical Bower style, sources say that this claim contains an error as it is understood that Gribkowsky never met Eisele. Ecclestone says "it's all bollocks and now Bower admits that he never had the letter and never did anything. He made a mistake Bower." If so, this would mean that the quotes from Gribkowsky were fabricated by Bower. It would be no surprise given that elsewhere in the book he makes allegations of race rigging which are utterly false as Pitpass has reported.

However, Bower's report may contain a kernel of truth as, in fact, Eisele is believed to have handed the letter to one of Gribkowsky's colleagues and this is thought to be Irrgang. It is worth pointing out that Irrgang is understood to have not co-operated with Bower when he was writing his book and that makes her all the more credible.

Irrgang has many years experience in the investment banking and private equity sectors. She started her career in the mergers and acquisitions and corporate finance division of Goldman Sachs in Frankfurt. Later she worked as investment manager with General Atlantic Partners, a global private equity firm providing capital and strategic support to growing IT companies. Afterwards, she acted as advisor to BayernLB on the restructuring, strategic alignment and sale of its stake in F1.

Eisele is believed to be following the case against Gribkowsky. What could his letter have contained that would make it so valuable to Gribkowsky and how did Eisele get hold of it? Eisele was paid off for dropping his anti competition complaint and it is understood that he negotiated this deal with Ecclestone. If the money was paid by the trust, accompanied with a letter saying that the trust had paid it as per Eisele's agreement with Ecclestone, it could be easy to interpret this as the F1 boss controlling the trust. In fact, the opposite is the case.

Ecclestone naturally has the best interests of the trust at heart and this is no surprise given that his children and ex-wife are beneficiaries. It would be therefore perfectly legitimate for him to inform the trust that paying Eisele would be in its best interests. This explains why, according to the indictment against Gribkowsky, Ecclestone allegedly informed the trust's lawyer Stephen Mullens, about Gribkowsky's threat since it could have caused unnecessary hassle for the trust. The indictment claims that Ecclestone asked the trust to cover around half of the $44m fee to Gribkowsky so the trust paying Eisele is no surprise.

At the time of his complaint to the European Commission, the trust owned 100% of F1 so Eisele's anti-competition complaint about the sport could have severely damaged its value. As Gribkowsky's lawyer pointed out on Monday, payments of the size that his client received are not uncommon in F1. Ecclestone has solved many of F1's problems by paying them and the sport would not be the same if he had not done so.

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