09/05/2014
NEWS STORY
The recent revelation that German prosecutors have admitted Bernie Ecclestone was blackmailed into paying £26m raises an interesting question. In short, what does Ecclestone have to prove to be found innocent of the bribery charges which he is currently defending in a criminal trial in Germany?
Ecclestone's defence is that the £26m was a blackmail payment and although the prosecutors have accepted this they also think that he paid a bribe. They have to prove it and if they do then Ecclestone could face up to ten years in prison.
To recap, the £26m was paid by Ecclestone and his Bambino family trust to Gerhard Gribkowsky, a senior executive at German bank BayernLB which owned a 47.2% stake in F1. In 2006 BayernLB sold the shares to F1's current owner, the private equity firm CVC, and over the following two years Gribkowsky received the money without telling BayernLB.
German prosecutors believe that the money was a bribe to get Gribkowsky to steer the sale of the F1 stake to CVC as it had agreed to retain Ecclestone as the boss of the sport. In 2012 the prosecutors convicted Gribkowsky for receiving the alleged bribe and this spurred them to come after Ecclestone for paying it. He denies paying a bribe and says that Gribkowsky threatened to tell the UK's tax authority, the Inland Revenue, that he controlled Bambino if the £26m was not paid.
Bambino has raised £2.4bn from selling stakes in F1 but no tax has been paid on the money as the trust is located offshore. In contrast, Ecclestone is a UK taxpayer so if he was found to be connected to the trust he would have to pay 40% tax on its assets. He strongly denies that he has ever controlled the trust and says he paid Gribkowsky even though his allegations were unfounded because if they had been reported to the Inland Revenue it would have triggered a lengthy and costly investigation.
Last week it came to light that although the prosecutors believe the reason for the payment was bribery they also claim that the money changed hands because of blackmail. It is a stunning development because, as Pitpass reported, it means that Ecclestone does not need to prove that Gribkowsky was capable of blackmailing him which is the claim at the heart of his defence. The prosecutors have already accepted it and that's not all.
The 256-page indictment against Ecclestone reveals that the prosecutors believe Ecclestone told Gribkowsky in 2005 that if he sold F1 to his preferred buyer he "would look after him" but that is not what led to the money changing hands. The £26m was paid in 2006 and 2007, long after the sale to CVC had taken place, and, according to the indictment, the payment was made when Gribkowsky "pressed for a concrete and actual fulfilment of the promised financial benefits" by blackmailing Ecclestone.
This is an extremely significant point for a number of reasons. Firstly, if any of the witnesses, including Gribkowsky who takes to the stand today, challenge this version of events then it blows a hole in the prosecutors' argument. This has already begun to happen.
Last week the court heard from Martin Bauer, an investigator who interviewed Ecclestone before Gribkowsky was convicted. He said "it was never really clear what form this threat [from Gribkowsky] could have taken." Bauer added that "[it was] like a vanilla pudding that you can't nail to the wall." This may sound like bad news for Ecclestone but in fact it is far from it. This is because the last thing the prosecutors want are witnesses who take to the stand and contradict the indictment against Ecclestone.
Clearly the threat from Gribkowsky was indeed a strong one because he managed to use it to extract £26m from Ecclestone and Bambino. The prosecutors accept this and so does Ecclestone so what does he have to prove to be found innocent? There is a simple answer to this.
The prosecutors say that Gribkowsky blackmailed Ecclestone to obtain the money he was due from agreeing to sell the F1 shares to CVC. It ultimately comes down to the prosecutors' claim that Ecclestone said "Gribkowsky should help him sell the Formula One shares held by BayernLB and in return, he would look after him." If this is what happened then Ecclestone did indeed bribe Gribkowsky regardless of whether the banker had to blackmail him to get him to pay up.
The prosecutors have already admitted that Gribkowsky blackmailed Ecclestone so the F1 boss does not need to convince them of that. If the bribery charge does not stick then Ecclestone will be found innocent. Indeed, Ecclestone is innocent until proven guilty so he also does not need to prove that he didn't bribe Gribkowsky. In contrast, the prosecutors need to prove that he did. And, as this is a criminal trial, the standard of proof is that the evidence has to be "beyond reasonable doubt."
To be specific, the prosecutors need to prove that Ecclestone said "Gribkowsky should help him sell the Formula One shares held by BayernLB and in return, he would look after him." Perhaps the biggest hurdle to the prosecutors doing this comes in the very first line of the indictment where it describes the timing of the alleged conversation between Gribkowsky and Ecclestone. According to the prosecutors it happened "in April/May 2005."
Yes, to cap it all, the prosecutors do not even know when the conversation, which is at the heart of their case, took place. Bearing that in mind, it will be interesting indeed to see if they manage to prove beyond reasonable doubt that it took place. Ecclestone's future hangs on it.
Chris Sylt