The bribery trial against Bernie Ecclestone takes a two week break for the summer at the end of today. It makes a good time to take stock and analyse what the likely outcome may be and where Ecclestone goes from here. This is easier said than done as the clearest conclusion which can be drawn from the proceedings so far is that we don't know much more than we did already.
Let's start with a recap of how we got here. German prosecutors have accused Ecclestone and his Bambino family trust with paying a £26m ($44m) bribe to Gerhard Gribkowsky, a former executive at state-owned German bank BayernLB which owned a 47.2% stake in F1. German prosecutors believe that Ecclestone paid the money to steer the sale of the F1 stake to its current owner the private equity firm CVC as it had agreed to retain him as the boss of the sport.
CVC took over F1 in 2006 and just under five years later the German authorities found out about the payment to Gribkowsky which he had not disclosed to BayernLB. In 2012 a Munich court ruled that he had received a bribe and sentenced him to eight and a half years in prison. This spurred the prosecutors to charge Ecclestone with paying it and the trial against him began at the end of April.
Adding to Ecclestone's woes is the fact that as Gribkowsky was a board member of a state-owned company he had the status of a public official in Germany. Bribing public officials is a particularly serious crime in itself and although cases typically concern payments made to policemen or politicians it equally applies to bankers in the same position.
Ecclestone denies paying a bribe and says Gribkowsky suggested that if the £26m was not paid he would tell the UK tax authorities that Ecclestone controlled Bambino.
The trust has raised £2.4bn from selling stakes in F1 but no tax has been paid on the money. This is because Bambino is located offshore but, in contrast, Ecclestone is a UK taxpayer. Accordingly, if he was found to be connected to the trust he would have to pay 40% tax on its assets. He strongly denies that he has ever controlled the trust and says he paid Gribkowsky, even though his allegations were unfounded, because if they had been reported to the tax authorities it would have triggered a lengthy and costly investigation.
Ecclestone's trial began with a flurry of media reports but interest has dropped sharply since then as it has become clear that the witness stand has been little more than a revolving door for faceless bankers and bureaucrats. Anyone expecting F1's most famous faces to give evidence will be sorely mistaken. Ecclestone's closest confidantes, Flavio Briatore and Max Mosley, are not scheduled to testify and even his ex-wife Slavica, who was well-acquainted with Gribkowsky, will not be there. Instead, this week's highlight is Kurt Faltlhauser, former deputy chairman of BayernLB's supervisory board who is hardly a household name.
Crucially, the court hasn't been presented with a smoking gun which could be traced back to Ecclestone. Quite the opposite in fact.
No conclusive evidence has so far come to light proving that Ecclestone did in fact pay a bribe. The prosecutors' case hinges on Gribkowsky himself who confessed to receiving a bribe when he was on trial in 2012. Ecclestone claims that Gribkowsky fabricated the confession in order to reduce his sentence and it could be said that his testimony lacks credibility as he is a convicted criminal.
Even Gribkowsky seemed to do a U-Turn on his own story when he gave evidence. When asked why he received the £26m Gribkowsky said "I never asked myself that question. I'm still annoyed with myself for that today." It is tough to see how the payment could have been a bribe to steer the sale of F1 to CVC if Gribkowsky himself did not know why he received the money.
Standing against the theory that the payment was a bribe is the fact that the prosecutors admit Gribkowsky did not actually have the power to approve the sale to CVC. This decision could only be made by a majority of BayernLB board members and Ecclestone has not been charged with bribing them. As Pitpass () pointed out on 28 June, if Gribkowsky did not have the power to steer the sale to CVC then how could Ecclestone have bribed him to do this?
Perhaps the most well-known witness in the trial so far has been CVC co-founder Donald Mackenzie. On 9 July he told the court that Ecclestone laughed off CVC's original £590.9m ($1bn) valuation of F1 and instead persuaded it to double the amount it paid. It was further evidence against bribery as it showed that rather than smoothing the way for CVC Ecclestone drove a hard bargain. If you think this sounds familiar you wouldn't be wrong. It was all reported 11 days earlier in our article which was based on the indictment against Ecclestone rather than court testimony.
Yesterday excitement was triggered by comments from Ecclestone which were reported by a few outlets because it was the first time that he had spoken in court during the trial. He didn't pick his moment to come out with something sensational but simply reiterated that he paid Gribkowsky to keep quiet and therefore "it was the cheapest insurance policy I have ever seen."
The wording is almost identical to Ecclestone's comments in court in November last year when he was sued in England by German media rights firm Constantin Medien. It claimed to have lost out through the sale to CVC as it had an agreement with BayernLB which entitled it to 10% of the proceeds if its F1 stake sold for more than £650m ($1.1bn). CVC paid BayernLB £481m ($814m) so Constantin missed out on a payment and it argued that if the sale had not been engineered other buyers would have come forward with a higher offer.
Ecclestone won the case as the judge ruled that he didn't undervalue F1 through the sale to CVC so what does he have to prove in order to win in Germany? It could come down to whether he knew that Gribkowsky was a public official.
Whilst there are conflicting explanations for the payment to Gribkowsky it seems on the face of it that the mere fact that money changed hands stands as evidence that Ecclestone paid a public official. After all, if policemen or a politicians receive unwarranted payments from members of the public they are obliged to return the money. The big question is whether Ecclestone knew that Gribkowsky was a public official and proving this is not as simple as it may sound.
Whilst there is no doubt about whether policemen and politicians are public officials it starts to get tougher to say when considering executives of state-owned entities. What about the board of the Royal Bank of Scotland, the British bank which is 64% owned by the government? If they are public officials then can the same be said of the executives who are second in command? It gets even harder to tell with a bank such as Lloyds as it is only 32.7% owned by the British government.
Then there are entities like the BBC which are state-funded but not state-owned. In summary, it is clearly not straightforward to tell whether someone is a public official. As Faltlhauser said this week "BayernLB appeared like any other commercial bank in its business dealings."
To find Ecclestone guilty of bribing a public official the judge has to prove this beyond reasonable doubt which is the standard used in criminal cases such as this. Ecclestone would be in trouble if the court is shown a tape of him admitting that he knew Gribkowsky was a public official or a letter from him saying the same thing. However, as we have already pointed out, the trial has lacked any of these kind of smoking guns and there is no suggestion that any are on the horizon.
Likewise, if a majority of the witnesses testified that Ecclestone had referred to Gribkowsky as a public official then it could count against him but again, this is not what has happened. Interestingly, it doesn't just play into Ecclestone's hands.
Perhaps the biggest hurdle in Ecclestone's way is the fact that the judge leading the trial against him is the same man who convicted Gribkowsky. This kind of situation would not be allowed in England but it is perfectly acceptable in Germany. Some might say that it is against Ecclestone's interests as it could make it less likely that the judge will find Ecclestone innocent. After all, if the judge rules that Ecclestone did not pay a bribe then it calls into question why he convicted Gribkowsky for receiving one.
However, his judgement has to be consistent with the evidence and if it does not show beyond reasonable doubt that Ecclestone paid a bribe then he can not convict him for this. In Gribkowsky's case he had no such dilemma because the moment that the former banker admitted to receiving a bribe then the judge had no choice but to find him guilty.
The hearings in Ecclestone's trial will continue until at least the middle of October and time will tell whether the judge rules that he is innocent or guilty. However, it is worth pointing out that there could also be a middle ground. The judge could conclude that Ecclestone bribed Gribkowsky whilst also ruling that he didn't know that the banker was a public official. This would give both a guilty and innocent verdict and it remains to be seen what the upshot of that would be. As always in F1, it isn't likely to be straightforward.