27/04/2014
NEWS STORY
All eyes were on a court room in Munich on Thursday as the bribery trial against Bernie Ecclestone began. However, the most explosive revelations are to be found in the indictment against the Formula One boss. One of the most surprising of these is that Ecclestone is paid £60m ($100m) annually by his ex-wife Slavica's Bambino trust according to an article in the Sunday Telegraph by Christian Sylt.
Ecclestone and Slavica were married for 24 years but divorced in 2009 on the grounds of his allegedly "unreasonable behaviour." It was widely-reported that Ecclestone paid his ex more than £600m making it one of the biggest divorce settlements in British legal history. In fact the payment flows in the opposite direction.
The 256-page indictment against Ecclestone lays bare his finances and states that "since his divorce from his wife the accused has received payments on the basis of the British decree nisi. The payments amount to around $100m per year. The duration of the payments from the divorce decree is not known."
According to the indictment, the details of the divorce settlement were given to the prosecutors in testimony from Frederique Flournoy who is a director of Bambino. It has made more than £2.4bn from selling shares in F1 and it is central to the reason why Ecclestone's ex paid him in the divorce settlement and not the other way round.
Bambino is based in in the tax haven of Liechtenstein and its beneficiaries are Ecclestone's ex and their two daughters. When it was set up in 1997 Slavica had not lived in the UK for long enough to be domiciled so if he had died she would have had to pay 40% inheritance tax on money received from him whereas spouses are usually exempt from this.
The concern over Ecclestone's future was fuelled by his poor health which culminated in him having a triple heart bypass in 1999.
To prevent his income from being taxed if he had died he transferred his most valuable assets, the entire share capital of F1's parent company, to a Jersey-based business called Petara which was ultimately owned by his ex. She then put the shares in the offshore trust so no tax has been paid on the money raised by selling them.
The catch is that, as a UK resident, Ecclestone is not allowed control over the trust otherwise it would be declared a sham and he would have to pay tax on it.
Ecclestone's defence to the bribery charges revolves around Bambino. He has been charged with paying a £26.2m bribe to former banker Gerhard Gribkowsky to steer the sale of F1 to the private equity firm CVC in 2006 as it had agreed to retain him as the boss of the sport. He denies paying a bribe and claims that Gribkowsky threatened to tell H.M. Revenue & Customs that he controlled the trust if the £26m was not paid.
The indictment claims that the "close family bond resulted in a strong actual connection between Bambino and the accused." However, Ecclestone denies that he controlled Bambino and says he paid Gribkowsky because his unfounded allegations could have triggered a lengthy and costly investigation.
Ecclestone's lawyer Sven Thomas released a statement on Thursday saying that the accusations against him "are incorrect, misleading and incoherent. They do not take account of the real course of events in 2005 and 2006 regarding Formula 1 and the life of Mr Ecclestone. The real course of events does not support the accusations." When the trial ends in September we will see whether the judge agrees.