The saga of Formula One's former chairman Gerhard Gribkowsky is turning out to be one of the longest-running scandals in the history of the sport and that is saying something. Gribkowsky was arrested in January last year on suspicion of receiving a bribe, breach of trust and tax evasion. He was charged with this in July 2011 and four months ago he was convicted by a court in Munich. At every step of the way new allegations have surfaced and although Gribkowsky's fate has been sealed, now is no exception. Reports are still emerging about the impact the case could have on F1 and its stakeholders.
The latest reports are perhaps the hardest to give credence to because, from behind the prison walls, Gribkowsky has given testimony which seems to put F1's controlling shareholder, the private equity firm CVC, in the thick of the action. One often wonders why anyone would want to use evidence from convicted criminals because by very virtue of their situation they may not be the most trustworthy of witnesses. Whilst it remains to be seen whether Gribkowsky's latest allegations hold any water, they seem to be some of the most fanciful of the case so far. Before we look at how they seem to bring CVC into the fray it is worth doing a quick recap of the twisting and turning events so far.
Gribkowsky became F1's chairman by virtue of his position as chief risk officer for German bank BayernLB which, until 2006, owned a 47.2% stake in the sport's former parent company SLEC. Gribkowsky was responsible for selling the bank's shares in F1 and in 2006 CVC paid it £527m ($839m) for them. Gribkowsky didn't tell his bosses that during the two years following the sale he personally received a total of £27.5m from F1's chief executive Bernie Ecclestone and his family's Bambino trust.
The money was paid into accounts in Austria where it was taxed at a lower rate than in it would in Germany where it should have been declared since Gribkowsky is resident there. This is why Gribkowsky was charged with tax evasion and he was also accused of breach of trust because he kept the payment secret from his bosses. However, it is the bribery charge which could have the most significant implications for F1. As Pitpass revealed last year, this charge was driven by the Munich prosecutors' belief that Gribkowsky received the money in return for him agreeing to sell to CVC which was allegedly Ecclestone's preferred choice because they wanted to retain him as F1's boss.
Ecclestone has disputed this version of events and last year revealed to Christian Sylt "I had a contract with BayernLB so they couldn't have fired me. [CVC] bought the contract so they had to take me as well." He has not denied paying the money but last year also revealed to Sylt that Bambino paid its share because Gribkowsky was doing property consultancy for the trust. Ecclestone says he paid his share of the money because Gribkowsky threatened that if this was not done he would tell the UK's tax authority that the F1 boss controlled Bambino.
There is no evidence that Ecclestone controlled Bambino, and he stresses that there was no substance behind this allegation, however he adds that he would have had to spend years in court defending it if Gribkowsky had tipped off the tax authority. At the time, the trust had not been given the green light by the UK tax authority and in the event that a court decision had gone against Ecclestone it would have been costly. Bambino has made around £2.4bn from F1 but no tax has been paid on the money as it is based in Liechtenstein. Ecclestone is a UK taxpayer so if he was found to be in control of the trust it could be declared a sham meaning that he would have to pay tax on the money which would leave him with a bill of around £1bn.
In June Gribkowsky testified in court that, after reflecting on the situation, he agreed he had been bribed. This led to his conviction for bribery but Gribkowsky's motives have been questioned because he was previously told that if he confessed his punishment would be more lenient and in the end he was sentenced to eight and a half years rather than up to 15.
To summarise, the prosecutors believed that Gribkowsky was bribed so that he would wave through the sale of F1 to CVC whereas Ecclestone says that there was no bribe as in fact he paid Gribkowsky to stop him making false allegations about his tax affairs. In the end Gribkowsky was convicted of receiving a bribe because he confessed to it. However, this confession is not proof that Ecclestone's version of events is inaccurate. Ecclestone has not been charged with any wrongdoing and was not a party in the recent trial so he has not had a chance to defend himself against Gribkowsky's confession.
It has been rumoured that Ecclestone would have to be charged with paying a bribe now that the prosecutors have convicted Gribkowsky of receiving it. However, in fact, the opposite may well be the case.
Gribkowsky's confession sealed his fate but precious little other evidence came to light in court proving that he received the money to wave through the sale to CVC. Indeed, plenty of evidence seems to contradict this theory. If the prosecutors charge Ecclestone then this evidence will have to be heard in great detail. Not only would the prosecutors have to face the full force of Ecclestone's legal might but they would also have to bear in mind that if he is found innocent of paying a bribe then it would call into question their conviction of Gribkowsky for receiving one.
Then comes the question of why they would charge Ecclestone now when they have had ample opportunity to do so earlier. Soon after the prosecutors discovered that Gribkowsky had received the money, and had not paid enough tax on it, they arrested him for fear that he would flee to a country which had no extradition treaty with Germany.