12/03/2011
NEWS STORY
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It has been a while since there we last heard any news in the papers about Gerhard Gribkowsky, the former chairman of F1's commercial rights holding company SLEC, who is currently in prison in Munich. Gribkowsky has been in a cell since January when he was arrested on suspicion of taking a $50m kickback for allegedly undervaluing a 47.2% stake in SLEC which his former employer, German bank BayernLB, sold to F1's current owners CVC in 2006.
Over the past two months the German media has been awash with speculation that F1's boss Bernie Ecclestone paid the $50m to Gribkowsky in 2006 and 2007 in return for him undervaluing the shares. Pitpass' business editor Chris Sylt has debunked this theory and concluded that it was as good as impossible that the shares were undervalued.
We are now more than two months into Gribkowsky's imprisonment and, surprise surprise, still no one has been arrested for paying the alleged bribe to undervalue the shares. Last month Sky News' business editor Mark Kleinman reported that an investigation into the circumstances surrounding the sale had been launched by CVC and SLEC's ultimate parent company Delta Topco.
Kleinman is an extremely skilled journalist who rose to become City editor of the Sunday Telegraph. He has not written a great deal about F1 but has covered several of the people at the periphery of the sport's management such as Sir Martin Sorrell who Kleinman once said "can legitimately claim to have a more comprehensive view of the consumer economy than any other company boss in Britain".
Sorrell is chief executive of the world's biggest advertising group WPP and is also one of Delta Topco's independent non-executive directors. Sorrell doesn't have a high profile in F1 but famously clashed with Ecclestone over his comments that Hitler could "get things done" and that former Renault F1 team principal should not have been banned for life for allegedly fixing the result of the 2008 Singapore Grand Prix.
In short, the news of the investigation into the sale of SLEC came from a credible source. Initially it was thought that the investigation suggested there were suspicions that money had indeed been paid for undervaluing the shares. However, Pitpass then revealed that the F1 Group is a client of the two firms handling the investigation, Freshfields and Ernst & Young, so their appointment had clearly not been demanded by an external body. In light of this news. the investigation was considered by some to be CVC putting a stamp on its claim that it "has no knowledge of, nor any involvement in, any payment to Mr Gribkowsky or anyone connected with him in relation to CVC's acquisition of Formula One".
Ernst & Young audits the accounts of the F1 Group so in the incredibly unlikely event that $50m was paid for undervaluing the shares it would have noticed this when the money was originally paid. Presumably Ernst & Young was satisfied then with the reason for the payment so what would be the point of getting it to go back over the transactions now?
Sky News claimed that Ernst & Young and Freshfields had been instructed to report back "within a matter of weeks," but two days after the report, Ecclestone told Sylt that in fact there would be no investigation. Lo and behold, four weeks later and no news has come of the investigation so it looks like Ecclestone was correct yet again.
Regardless, the more tangible issue is that as long as Gribkowsky is sitting in jail there will be speculation about what landed him there. In his report about the investigation Kleinman wrote that "Pitpass, an F1 news website, reported at the weekend that Gribkowsky has been in a Munich prison since his arrest last month although I am not clear whether this is still the case." However, contrary to this suggestion, Gribkowsky is most certainly in custody and he may well be there for some time to come.
Speaking to Sylt earlier this week, Barbara Stockinger, spokesperson for the German prosecutors, said that "the German code of criminal procedure contains no absolute restriction on custody from the point of view of time." She added that "this means that there's no telling at present how long Dr Gribkowsky will remain in custody." So it is abundantly clear that Gribkowsky is in custody but it is much harder to tell if or when he will be released.
Meanwhile, the Germany's Suddeutsche Zeitung reported on Friday that senior Munich prosecutor Hildegard Baumler-Hosl and her team are deciding whether to bring proceedings against Ecclestone who, it claims, has engaged a German lawyer. No doubt some sections of the media will yet again see this as indicating that Ecclestone was indeed involved with some kind of scheme to undervalue the SLEC shares. However, as the initial reaction to the alleged investigation shows, it is most prudent not to jump the gun.
The upshot is that it doesn't look like Ecclestone is going anywhere. In the wake of the reports about the investigation, rumours began to swirl around that an independent outside chairman would be appointed to Delta Topco. However, as Pitpass reported at the time, F1 certainly doesn't need one. CVC of course saw sense and earlier this week Kleinman reported that "in recent weeks the prospect of such an appointment may have faded." It is little surprise since Ecclestone has CVC's full support. "He is a good chap - tough but fair," CVC's UK managing director Nick Clarry told Sylt.
Oddly, Kleinman's report earlier this week contained the following unusual line: "(A comprehensive account of Gribkowsky's involvement in F1 is contained in Tom Bower's excellent new biography of Bernie Ecclestone, the F1 supremo, which was published last month.)"
Putting an entire paragraph in brackets seems odd in itself but throwing in a reference to a "comprehensive account" without stating the precise part, if any, which is relevant is what got Sylt's attention. One would imagine that the account can't be that sensational since all the major papers have done reviews of Bower's book and none has yet mentioned anything connected to Gribkowsky.
Having said that, there may be a very good reason for this since, as an upcoming Pitpass article will reveal, Bower's book is packed to the brim with errors. We aren't just talking about the odd typo here and there - Bower's figures don't add up, dates are inaccurate, locations are false, names refer to people who don't exist, race results are wrong and some of the most important people in the history of F1 (the sport's medical chief Sid Watkins for example) are not even mentioned once in the entire book.
Bearing this in mind, it is virtually impossible to trust the content of Bower's book so you could understand if reviewers shy away from reporting anything but the most bland of facts in it. The readers are of course spotting this and one wrote on Amazon that the book is "seriously let down by its numerous mistakes."
Not ideal to have in any writing about Bernie Ecclestone that's for sure.