19/07/2013
NEWS STORY
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On Wednesday the Munich Regional Court announced that it had charged Formula One's boss Bernie Ecclestone with paying a £28.9m ($44m) bribe in connection with the sale of the sport to current owner, the private equity firm CVC, in 2006. In the wake of the announcement Ecclestone embarked on a whirlwind of interviews telling many media outlets that he isn't concerned by the situation and that it doesn't affect his position. It didn't stop the inevitable flood of error-ridden reports predicting the end of F1 as we know it.
As Pitpass pointed out back in May, the German legal system is very different to the one in the UK. When someone is charged with a criminal offence such as bribery in the UK the person in question is going to court like it or lump it. The case can get thrown out for lack of evidence but that only happens once it is already in court.
In contrast, in Germany when someone is charged with a criminal offence that doesn't mean they are going to court. Instead, what happens is that a judge decides whether the case should go to court and that is how things currently stand with Ecclestone.
His lawyers have six weeks to respond to the charges against him and the judge will then decide whether there should be a trial. You wouldn't have guessed that from reading much of the recent media coverage. "The lengthy and complex case is finally set to go to court," proclaimed one of the pieces which was written by someone who is presumably a dab hand at using a crystal ball. It is indicative of the general lack of understanding.
One of the articles claimed that charging Ecclestone has left F1 in "total chaos." Another piece was widely applauded on social media despite reading like an obituary of Ecclestone. Stories of his demise amuse the F1 boss no end because it gives him an easy opportunity to defy his critics. You would have thought that some reporters had been around long enough to realise that his obituary should only be unleashed when he really is a goner and that certainly isn't the case now.
Another recent article went a step further and alleged that "Mr Ecclestone has until mid-August to respond to the charges. The court will then decide whether to take the case to trial - it could be heard by mid-September."
One blogger, who sees himself as judge, jury and executioner in all matters F1, even went as far as to say that a European Arrest Warrant will be issued for Ecclestone. You had to have an eagle eye to spot this indiscretion because soon after the piece was posted it was altered to more closely reflect the truth. Despite wearing glasses, nothing escapes Ecclestone's gaze and Pitpass hears he was not best impressed with the original version.
The reality is that in September we should find out whether Ecclestone is going to court over this. If there is a trial, the chances of it starting then are incredibly remote. We don't have to look too far to find evidence for this.
Gerhard Gribkowsky, the former chief risk officer for German bank BayernLB, is the man who allegedly received the £28.9m bribe and in June last year he was sentenced to eight and a half years in prison for this. Gribkowsky was charged in July 2011 and his trial started four months later. There is next to no chance that it would take less time to get Ecclestone in court than Gribkowsky. Don't forget that Gribkowsky was a German citizen who was already incarcerated in Germany and whose assets had been frozen. In contrast, Ecclestone is resident in the UK, has very deep pockets and is a free man.
The big question is whether the case will go to trial at all. Unlike many armchair legal commentators out there, Pitpass is not going to try to predict the judge's decision but suffice it to say that the situation is certainly not black or white. In Formula One it rarely is.
At a very basic level, it could put the court in somewhat of a Catch 22 if there was a trial which finds Ecclestone innocent of paying the alleged bribe.
Ecclestone is already represented by several of the best corporate lawyers in Germany and the judge will be well aware that the F1 boss will put up one of the biggest fights they have ever seen. If it leads to him being found innocent of paying the alleged bribe then that may well call into question why Gribkowsky was imprisoned for receiving it. Not only could this publicly embarrass the German court but it could also expose it to a damages claim from Gribkowsky.
On the face of it, this argument may sound counter-intuitive as it could seem hard to imagine how Ecclestone could be found innocent of paying the bribe given that Gribkowsky has already been found guilty of receiving it. However, it isn't as straightforward as that.
This is largely because, as Pitpass reported just over a year ago, the verdict of the Gribkowsky case could not be used in a trial against Ecclestone. All of the pertinent facts would have to be proved from first principles because it is a separate case and, crucially, because Ecclestone has not had a chance to address them – he was simply a witness in the Gribkowsky trial.
Gribkowsky is understood to be the star witness in the prosecution's case against Ecclestone. The case is said to hinge on Gribkowsky's admission in court last year that the payment to him was a bribe to ensure that he would sell BayernLB's 47.2% stake in F1 to CVC. He claimed that at a meeting in 2005 Ecclestone told him, "if you help me to sell Formula One, I will employ you as a consultant."
The prosecutors believe that CVC was Ecclestone's preferred buyer as it had agreed to retain him as F1's boss. They also claim that selling to CVC reduced the value of the bank's stake in F1 as other buyers could have paid more.
Ecclestone denies this and, as Pitpass' business editor Christian Sylt revealed in July 2011, he claims that Gribkowsky threatened to make false allegations about his tax affairs if the money was not paid.
Essentially it is a case of 'he said, she said' however there is one crucial difference. This difference is that Gribkowsky is now in prison and this could make him a discredited witness. True, Gribkowsky's incarceration is directly linked to the crime which Ecclestone has been accused of but the problem is compounded by the fact that he changed his testimony several times.
Gribkowsky initially claimed that the payment to him was for consultancy work but he is understood to have switched to a guilty plea to reduce his sentence when it became clear that the court would decide against him. The fact that Gribkowsky has pleaded both innocent and guilty is proof that he is prepared to give false details in court. Coupled with the fact that Gribkowsky is now in prison, he does not seem to be a credible witness and if the prosecution's case hinges on him the judge may decide that it isn't worth risking going ahead with a trial. Lack of credibility may not be the only problem with Gribkowsky's testimony.
Writing in the City A.M. newspaper Sylt reveals that, according to Ecclestone's lawyer Sven Thomas, there is no record of the meeting when Ecclestone allegedly arranged the bribe with Gribkowsky. "In his witness statement Gribkowsky described a meeting in April or May 2005 when Bernie said 'I will take care of you'. We can not find the records of this. We have checked all possible meetings and I covered the next months too," says Thomas.
He adds that "there was an appointment on 20 June but we do not know whether they met then. Bernie does not remember whether he met Gribkowsky then." It took place the day after an infamous US Grand Prix in Indianapolis when only six cars took part due to safety concerns over the Michelin tyres.
Thomas says that "I found out it was the day after the race with six cars so it is quite impossible that there would have been a meeting about corporate governance because there were other topics which were a little bit more important in Formula One. Gribkowsky had to be aware at that time that the value of Formula One shot down because of Indianapolis."
Ecclestone says that his position is not in danger as a result of being charged and a source close to CVC says that it "could have asked Bernie to leave at any time over the past three years but we haven't because we support him." Time will tell whether the judge in Germany is also on his side.