16/11/2013
NEWS STORY
Last week Pitpass featured an article about an allegation in the High Court trial against Formula One boss Bernie Ecclestone which is currently going on in London. The allegation in question was that in 2001 a subsidiary of Ecclestone's Bambino family trust had given payments of £6.2m ($10m) to the owners of four teams in return for them committing to stay in F1 by signing the 1998 Concorde Agreement. In our article we urged for caution in describing the payments as bribes and we concluded that "the upshot for writers and editors is that the devil (or perhaps an angry billionaire) is in the detail."
It seems our appeal for prudence fell on deaf ears as yesterday's round of media coverage hasn't just attracted attention from Pitpass but also from Ecclestone's lawyers.
Since the trial began on 29 October it has covered a wide range of ground from the payments to the teams to Ecclestone's memory and his relationship with colleagues. The trial has yielded very little news which is relevant to the sport or business of F1 in the present day. The payments to the teams highlight this point as they relate to events which took place well over a decade ago. There is good reason why the content of the court case is firmly focused on the past.
The lawsuit has been brought by German media rights firm Constantin Medien. It is a former shareholder in F1 and in 2003 Constantin sold a 16.7% in the sport to German bank BayernLB for £7.3m (€8.5m). It was an incredibly low price and it came with a catch.
BayernLB already had shares in F1 and this deal gave the bank a total of 47.2% of the sport. Constantin agreed to sell its shares for such a low amount on condition that it would get 10% of the proceeds if BayernLB sold its 47.2% stake for more than £700m ($1.1bn). It was sold in 2006 to private equity firm CVC which is now F1's largest shareholder. Although CVC offered the highest bid, it paid £508.3m ($814m) to BayernLB so Constantin did not share in the proceeds.
Constantin's lawsuit claims that Ecclestone and Bambino paid a £27.5m ($44m) bribe to BayernLB's former chief risk officer Gerhard Gribkowsky to ensure that he sold the 47.2% stake to CVC. Constantin says that CVC was Ecclestone's preferred buyer for the stake as it had agreed to retain him as F1's boss. In 2011 Gribkowsky was arrested for receiving the alleged bribe and in June last year he was found guilty of this and was sentenced to eight and a half years in prison in Germany. His arrest led to Constantin filing its lawsuit which is against Ecclestone, Gribkowsky, Bambino and the trust's former lawyer Stephen Mullens.
In order to win its case Constantin doesn't just have to demonstrate that a bribe was paid but that this led to F1 being undervalued and therefore to it losing out on its share of the proceeds. Perhaps surprisingly, a great deal of its evidence is in media reports. Witnesses have been repeatedly asked if they agree with or remember events described in newspaper, magazine or website articles which are sourced from a wide range of outlets.
One outlet frequently referred to is the website worldcarfans.com which is a bizarre choice as it is not known for its F1 coverage. Another equally unusual but often-named source is Atlas F1 - a website brand which was discontinued more than five years ago. The fact that events in the case were reported on Atlas F1 is another reminder that the details are far from relevant to the sport today. Given how long it has been since the Atlas F1 brand was dropped it is no surprise that it has lost currency within the industry.
On 5 November the judge Mr Justice Newey asked F1's chief financial officer Duncan Llowarch "do you have any kind of press cuttings service within the organisation?" Llowarch responded "We do, yes. Although it tends to be focused on the UK press." One of Constantin's QCs David Blayney then followed this up by asking for the name of the press cuttings service and saying "is it Atlas?" Llowarch replied "that's not a name I recognise. Precise Media are the people who do it for us."
More recently, when Mullens was giving evidence another Constantin QC Philip Marshall directed him to "an article from the Atlas F1 News Service" and asked "is this something you subscribe to?" Again the answer was of course "no." Even when Mr Marshall referred to a current publication he didn't have any luck. He asked Mullens "isn't it right that you would have been able to also obtain media coverage in Autosport, for example, which is, as I understand it, linked to Atlas F1?" However Mullens replied "No, I've never read Autosport. I'm not really very interested in cars."
Relying on old media reports may seem strange but in fact it is a deliberate part of Constantin's strategy. Ecclestone, Bambino and Mullens claim that they did not even know that Constantin had an agreement with BayernLB to get 10% of the proceeds from the sale of its stake. If this is the case then it would be hard for Constantin to demonstrate that the defendants acted deliberately against it.
To try and show that the defendants did know about Constantin's agreement it has come up with old media coverage about it and asked if they had seen it when it was published. The response is always the same - as Mullens said: "I didn't see that and it wasn't brought to my attention. I had no knowledge of these rights until this litigation was commenced."
Another of Constantin's strategies revolves around evidence given by Gribkowsky in court last year. Near to the end of Gribkowsky's trial he was told by the judge that if he confessed he would be given a sentence of between 7 years and 10 months and 9 years. Gribkowsky proceeded to confess to receiving a bribe and was given a sentence within this range. Ecclestone, Bambino and Mullens claim that Gribkowsky fabricated the confession over fear that if he had not done this he would have been found guilty anyway and would have got a longer sentence.
Accordingly, Ecclestone, Mullens and Bambino dispute the details of Gribkowsky's testimony whilst Constantin wants to demonstrate that it is accurate as he admits to receiving a bribe. This brings us back to yesterday's media coverage.
On Wednesday, which was Mullens' final day of questioning, Mr Marshall put it to him that Gribkowsky had told prosecutors he felt threatened by Ecclestone. In order to demonstrate that it was not irrational for Gribkowsky to think this, Mr Marshall tried to show that Mullens himself had also thought that a threatening incident could possibly have been connected to Ecclestone.
Pitpass has seen a transcript of the discussion about this by Mullens and Mr Marshall and we can present the facts here. It concerns what Mullens described as "an horrific robbery" which took place at his home in April 2009. This was in the midst of the divorce proceedings between Ecclestone and his ex-wife Slavica and Mullens confirmed that he "was assisting Mrs Ecclestone."
The key part of the discussion is presented below verbatim with the answers from Mullens and the questions from Mr Marshall. He starts by referring to the robbery which Mullens had briefly touched on at the end of the previous day:
Q. And you had this what you described as horrific burglary.
A. Robbery.
Q. Or robbery. Right.
A. Yes.
Q. And that took place at your home; is that right?
A. That's correct.
Q. And it crossed your mind that this might have been orchestrated by Mr Ecclestone?
A. Lots of things crossed my mind. When you have been, when you and your family have been, traumatised lots of things cross your mind as to why? Who?
Q. Do I have to repeat my question again?
A. You may, if you like.
Q. Didn't you hear it?
A. I'm not sure I heard it entirely. I thought I had answered your question.
Q. Let's try again. What you said yesterday is that it crossed your mind that the burglary or robbery had been orchestrated by Mr Ecclestone. Is that not correct?
A. It crossed my mind that he might have. It also crossed my mind that a very large number of other people with whom I'd had dealings professionally and personally may have been involved. That's what happens when you have been subjected to an horrific trauma. You try to understand why.
An article about this was then published on Friday in the sports section of the Daily Telegraph and was rewritten repeatedly during the day. It attracted the attention of Ecclestone's QC Robert Miles who said to the judge in court that "a very disturbing article has appeared in the newspaper today, in the course of today. And if I could perhaps provide your Lordship with a copy. My Lord, this is in The Telegraph for today. You will see that the headline says, 'Bernie Ecclestone accused of organising horrific robbery at home of former advisor Stephen Mullens'. It goes on to say "former legal advisor Stephen Mullens tells court he suspects Formula One chief may have orchestrated robbery at his home." Then it goes on to describe some of the background. I should say it's by a journalist called Tom Cary, who is actually writing from Austin, Texas, where there's a Formula One race to take place, I think, this weekend, but who was not actually in court when this evidence was given."
Mr Miles added "this is obviously an extremely serious allegation of a serious criminal offence by my client in circumstances where it was never suggested or even hinted to Mr Ecclestone when he gave three and a half days of evidence that he was in any way involved in this robbery. Mr Marshall has hinted at it with Mr Mullens. He came back to it again today. And we are extremely concerned."
Mr Miles continued to say "it's not, we would say, fair and accurate reporting of what took place in court." The judge shared a similar view and said "just mulling it over, in terms of the accuracy of the reporting, I think one could take issue with the headline." In response Mr Miles said "yes. And, indeed, with then what follows. Your Lordship may recall that what Mr Mullens actually said was that it came, I'm paraphrasing now, that it came into his mind and left his mind almost immediately. The second time he was asked about it, he said that it came into his mind again fleetingly, but he also thought that there might be all sorts of other people responsible."
The judge pointed out that "looking at it, at the moment, the headlines don't really seem to me to marry up with the evidence." The situation has changed somewhat since yesterday as Cary's piece has been repeatedly re-written. It wasn't lost on readers with one commenting on Twitter that "this re-reporting of purely speculative game playing in court is irresponsible. Shame on you."
It appears that this isn't the first time this has happened in the Telegraph's sports section as indicated by the comments below their article on Kevin Magnussen replacing Sergio Perez at McLaren next year. "Naturally the 'Telegraph Sports Commi:tteeee' [sic] has surreptitiously changed their mistake without offering an explanation" wrote one reader. Another said: "Kevin Magnussen confirmed as replacement for Sergio Perez at McLaren for the 2014 Formula One season
Sergio Perez will be replaced by rookie Kevin Magnussen at Lotus next season" make your minds up DT - or is this another article from a journo who doesn't know his subject. Shoddy editing of the highest quality !"
It certainly isn't the first correction which has been made to a report about details connected to the court case. On the morning of the first day of the trial the Financial Times wrote a piece which referred to Bambino as the "Swiss-based Ecclestone family trust" when in fact it was founded in Liechtenstein. It was only a small error but it would have been better having none in the article given that it was about the sensitive subject of Swiss authorities launching a criminal probe into the payments to Gribkowsky.
The piece was written by the FT's Leisure Industries Correspondent Roger Blitz who covers a wide range of industries from cycling and boxing to bingo and travel agents. His co-authors on the article were two FT journalists Duncan Robinson and James Shotter who have even less of a track record specialising in writing about the business of F1. The FT issued a correction of the error but there was worse to come.
Last week Blitz, wrote a piece which claimed that "completion of the sale to CVC was dependent on the signing of a 100-year agreement with the motorsport governing body, Federation Internationale de l'Automobile." In fact, the agreement to grant Ecclestone's company the 100-year rights to F1 was signed five years before completion of the sale to CVC. This is revealed on page 173 of the prospectus for the stalled flotation of F1 which states that "the 100-Year Agreements... were signed in April 2001 between certain of our subsidiaries, including Formula One World Championship Limited, and the FIA."
These kind of errors in the FT's reporting on F1 are nothing new. In 2005 it wrote a piece claiming that CVC bought F1 "for a sum understood to be about $1bn." Two years later this had changed as Blitz wrote that "CVC Capital Partners will not say what it paid for F1, although a reported estimate of $1.7bn is thought to be well short of the mark."
Four years later Blitz' own colleagues contradicted him when Daniel Schäfer, Jane Croft, and James Wilson - three other journalists who infrequently cover F1 - claimed that F1 was "sold by banks for $1.7bn." That's consistency for you.
It shouldn't come as a surprise to long-standing Pitpass readers who may remember that last year we reported on editorial standards at the FT after hearing about an incident when an editor at the paper distributed an external writer's work without his permission. What's worse is that the editor then claimed that the reason for doing this was that he "saw no reason not to."
Ironically, the FT's report on Mullens' robbery was more measured than some of the other media coverage of it. Nevertheless, the QCs for Bambino and Ecclestone believe that the robbery should not have even been discussed in court.
Bambino's QC Tom Smith said "we entirely endorse what my learned friend Mr Miles has said. It was an entirely inappropriate line of questioning by Mr Marshall, we submit, on Wednesday and Thursday. It has caused real distress to Mr Mullens and to his family. It's also very concerning indeed to see that Mr Mullens' evidence has now been very badly misreported, we would submit, in the press, certainly in the headline of The Daily Telegraph story. And we would also like to know now what, if any, allegation is being made by the claimant in relation to this matter."
Mr Miles added "this has not just been in The Telegraph; apparently there's now also an article in The Times about it. My Lord, this is, they are, playing with fire when they behave in this way. This is the sort of thing that appears. And, my Lord, they really need to stand up and make it quite clear that this is no part of their case."
Addressing this, the judge asked Mr Marshall whether the robbery or a similar issue is likely to be raised in his discussion with the only remaining factual witness - CVC co-founder Donald Mackenzie who will be speaking next week. "I don't see it arising in connection with Mr Mackenzie at all, my Lord, no," said Mr Marshall in response.
The judge concluded that he is "not going to be influenced by press coverage. But, at the same time, it is a concern to me because this case has to be fought out in the courtroom not through exploiting the press." It seems his message has now been heard loud and clear.