Last month Mr Justice Newey, a judge in London's High Court delivered what can only be described as a bitter-sweet victory in a case which had been brought against Formula One boss Bernie Ecclestone. Although Ecclestone won the case Mr Newey ruled that he paid a bribe to steer the sale of F1 to the private equity firm CVC. Ecclestone is due to be put on trial in Germany next month over this very matter so it may seem like Mr Newey's comments don't stand him in good stead. However, in fact, this may be far from the truth.
To understand the reason for this let's start with a recap. At the heart of Ecclestone's legal troubles is a $44m payment to Gerhard Gribkowsky, the former chief risk officer at German bank BayernLB (BLB). Ecclestone provided $22.8m of the money with the remaining $21.2m coming from his Bambino family trust. Gribkowsky was responsible for selling a 47.2% stake in F1, which was owned by BLB, and in 2006 it was purchased by CVC. Bambino and F1's two remaining shareholders, the investment banks JP Morgan and Lehman Brothers, followed BLB and sold to CVC giving it control of F1.
German prosecutors believe that the $44m payment to Gribkowsky was a bribe so that he would agree to sell to CVC as it had committed to retaining Ecclestone as F1's boss.
The alleged bribe was central to the related case last month which was brought by German media rights firm Constantin Medien. It claimed that it lost out through the sale to CVC as it had an agreement entitling it to 10% of the proceeds if the stake sold for more than $1.1bn. Constantin got nothing as CVC paid $814m but it argued that higher bidders would have come forward if the sale had not been engineered by Ecclestone, Gribkowsky, Bambino and its former lawyer Stephen Mullens.
They successfully defended the claim from Constantin but that is not the end of the legal battles. Next month Ecclestone is due to face criminal charges in Munich that the payment to Gribkowsky was a bribe. In 2012 the same court in Munich ruled that Gribkowsky had received a bribe and sentenced him to eight and a half years in prison.
In his judgement last month Mr Newey ruled against Constantin and said that "it was no part of Mr Ecclestone's purpose (or Mr Mullens') for BLB's shares to be sold at an undervalue... no loss to Constantin has been shown to have been caused by the corrupt arrangement with Dr Gribkowsky. That fact is fatal to the claim."
Nevertheless, Mr Newey added that "the payments were a bribe... Mr Ecclestone's aim was to be rid of the Banks. He was strongly averse to their involvement in the Formula One group and was keen that their shares should be transferred to someone more congenial to him."
This sparked widespread reports that the comments will count against Ecclestone in Germany as they add fuel to the argument that he paid a bribe. However, that is only part of the story.
The German prosecutors' case against Gribkowsky was based on the claim that the bribe led to BLB incurring $66.4m of damages. There are two components to this and the first is a commission of $41,443,330 paid by BLB to Ecclestone at the time of the sale to CVC. As Pitpass revealed in October 2012, Ecclestone says the commission was paid in return for him providing a $100m indemnity, requested by CVC, that "all the [F1] books were straight and there was nothing wrong."
The prosecutors believe that the money was in fact paid to compensate for Ecclestone's share of the alleged bribe so it should be paid back to BLB. In response, Ecclestone told Pitpass that "I had enough money to pay Gribkowsky. I didn't need any money from BayernLB." There is little doubt about that.
The second component of the alleged damages incurred by BLB is a $25m payment by the bank to Bambino. Like the payment to Ecclestone, this was also paid at the time that CVC bought F1 and Bambino says it got the money to settle an outstanding debt.
It claims that the debt in question dates back to 1998 when a stock market flotation of F1 was being planned. In order to ensure that the flotation raised as much money as possible, all of the teams needed to sign the Concorde Agreement - the long-term contract which committed them to the sport. In return the teams were offered shares in F1 or $10m in cash. Four of them - Arrows, Benetton, Jordan and Prost - went for the option of cash though it took them a while to get it.
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