06/11/2013
NEWS STORY
Formula One boss Bernie Ecclestone will be giving evidence at London's High Court today in the trial brought against him by German media firm Constantin Medien and it looks like he has good reason to be smug about it. Writing in the Independent, Pitpass' business editor Christian Sylt has revealed that the claim against him has been reduced by $30m to $140.4m which is not a bad way to start.
Constantin claims that a 47.2% stake in F1 was undervalued when it was sold by German bank BayernLB (BLB) to current owner, the private equity firm CVC, in 2006.The lawsuit alleges that Ecclestone and his Bambino family trust paid a $44m bribe to BLB executive Gerhard Gribkowsky to steer the sale to CVC as it had agreed to retain him as F1's boss.
Constantin had an agreement to receive 10% of the proceeds if the stake was sold for more than $1.1bn but it didn't get anything as CVC paid $814m. It initially claimed that the stake was worth $2.8bn and in 2011 it filed a lawsuit against Ecclestone, Gribkowsky, Bambino and the trust's former lawyer, claiming $171m in damages.
However, in court on Friday, Mark Hapgood QC acting for Bambino, said "the claim was originally for $171 million. In the light of the claimant's expert report on valuation, it has been reduced to $140.4 million. And to have been entitled to that sum under the participation agreement, the BLB's interest would have had to be sold for $2.493 billion." He added "this is a massive hurdle for Constantin to overcome... these are just fantasy figures compared to the real world at that time."
This tone has been reflected in many other areas of the trial and Sylt is working on detailed analysis of the proceedings which contains some startling revelations.
Ecclestone of course has been charged in Germany with paying the alleged bribe but he has not been convicted of this and authorities have not yet decided whether to bring him to trial. Constantin attempted to put the details of the German indictment on the record in the High Court but Mr Justice Newey refused and also prevented it from being distributed to anyone who is not connected to the case.
"It is not as if you would agree with a number of the arguments put forward in the indictment," he told Philip Marshall QC acting for Constantin. "It would be fatal to your case, wouldn't it, what they say about the purchase price?"
Referring to this, Robert Miles QC, acting for Ecclestone, told the court that following the sale, BLB's former chairman Werner Schmidt said "we were given the opportunity to get out of the shareholding with extremely high proceeds. When I say extraordinary high, I'm measuring the proceeds against the book value which, if I remember rightly, was doubled."
Mr Miles said that at the end of 2004 BLB valued the stake at $365.6m and he read out evidence from Harald Glöckl, a director at the bank, who said that "the net purchase price of 765 million is so far the highest price we could negotiate with prospective customers for our holding. At present we do not have an alternative offer and it appears to us very unlikely that we will receive a comparable offer in the foreseeable future." Constantin disagrees and when the case is over in around five weeks we will find out what the judge thinks.