10/05/2014
NEWS STORY
Former banker Gerhard Gribkowsky gave testimony to a German court on Friday which calls into question the bribery charges against Bernie Ecclestone.
Formula One's boss has been accused of paying part of a £26m ($44m) bribe to Gribkowsky in return for him agreeing to steer the sale of a 47.2% stake in the sport to its current owner the private equity firm CVC. Gribkowsky was in charge of selling the stake which was owned by German bank BayernLB and was sold to CVC in 2006.
Over the following two years Gribkowsky received the £26m payment from Ecclestone and his Bambino family trust but the banker did not disclose it to BayernLB. German prosecutors believe that Ecclestone wanted Gribkowsky to sell to CVC as it had agreed to retain him as F1's boss. In 2012 the prosecutors convicted Gribkowsky after ruling that the payment he received was a bribe. This spurred them to come after Ecclestone for paying it and the trial against him began at the end of last month.
Ecclestone 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.
So far, no conclusive evidence has come to light proving that Ecclestone did in fact pay a bribe. The prosecutors' case hinges on Gribkowsky himself who confessed to receiving a bribe when he was on trial in 2012. To be specific, on 20 June 2012 Gribkowsky said "it took me a long time to come to terms with what I have done and to admit even to myself: Yes, it was bribery."
It was a very blunt admission which was difficult to misconstrue and this is why Gribkowsky was convicted. Ecclestone claims that Gribkowsky fabricated the confession in order to reduce his sentence and there is evidence in favour of this.
Before Gribkowsky made the confession the judge told him that "on the basis of past evidence... a fully comprehensive confession encompassing all the allegations, would impose a cumulative custodial sentence of between 7 years and 10 months and 9 years." In other words, Gribkowsky was told the range of how long his prison sentence would be if he confessed. He ended up getting eight and a half years which was in the middle of the range.
All the prosecutors needed Gribkowsky to do was to reiterate his confession when he gave evidence in the trial against Ecclestone. This would have given the prosecutors the fuel they needed to support the claim that Ecclestone bribed him. The prosecutors couldn't simply use the confession from the trial against Gribkowsky because the case against Ecclestone needs to be proven from first principles.
However, when Gribkowsky took to the witness stand on Friday he did the opposite of repeating his confession. In fact, according to Reuters' European Sports Business Correspondent Jorn Poltz, Gribkowsky struggled to give precise details on what had gone on. When asked why he received the £26m Gribkowsky said "I never asked myself that question. I'm still annoyed with myself for that today."
Poltz says that it clearly surprised the judge Peter Noll, who was presumably expecting Gribkowsky to repeat his confession that "it was bribery." Noll was the judge who convicted Gribkowsky so it is no wonder that the former banker's testimony will have surprised him. "It's hard for me to comprehend (what went on) if you are unable to say more precisely how it came about," Noll told Gribkowsky. But that was just the start of the prosecutors' problems.
Earlier this week it came to light that the prosecutors have actually admitted the key facts at the heart of Ecclestone's defence. Although the prosecutors believe the reason for the £26m payment was bribery they also claim that the money changed hands because Gribkowsky blackmailed Ecclestone about his connection to Bambino. Surprisingly, in court on Friday Gribkowsky confirmed that he had indeed put pressure on Ecclestone.
In 2004 and 2005 BayernLB, and two other banks which owned stakes in F1, sued Bambino and Ecclestone over control of F1. According to the Guardian's Philip Oltermann, Gribkowsky admitted on Friday that he attempted to "create pressure to reach an agreement" between Ecclestone and BayernLB during the legal dispute.
This won't come as a surprise to long-time Pitpass readers as we revealed it way back in October 2011 when Ecclestone told us that during the legal action in 2004 "when they were talking about the trust, Gribkowsky kept on saying ‘you mean Mr Ecclestone.' He said to me ‘I could have gone much farther and deeper at the time but I didn't and, you know, I wondered if it ever happened again what would I say?"
Oltermann says that Gribkowsky even gave details in court of how he blackmailed Ecclestone. In one instance the banker placed an explosive A4 document underneath a pile of papers on Ecclestone's desk during a meeting. Gribkowsky said in court that the purpose of this was "to show we are active, to show we have done our homework." He said it showed that BayernLB could "play by the same rulebook" as Ecclestone.
Gribkowsky told Noll he had no knowledge of what was on the document. "I'm sure I looked at it at the time, but my lawyers told me it was useless, so I quickly forgot," he said. This sounds strange since there would have been no point in leaving the document on Ecclestone's desk if it really was "useless." In fact, given that Ecclestone settled the case brought by BayernLB two months after the document landed on his desk it seems unlikely that these methods were as useless as Gribkowsky suggested.
When Ecclestone discovered the document after the meeting, he phoned Gribkowsky to ask what it was meant to signify. Gribkowsky allegedly said he didn't know and Noll asked him what was the point in saying that given that he wanted to put pressure on Ecclestone. Gribkowsky said it had been a "spontaneous response" and Noll remarked that it had an air of "conspirational methods." It was manna from heaven for Ecclestone's lawyer Sven Thomas who said Gribkowsky's testimony proves "that pressure was applied, which goes beyond the normal level."
The document on Ecclestone's desk may also ring bells with longstanding Pitpass readers. As we reported in 2011, it came to light during the investigation into Gribkowsky and it is understood that he got it from Alexandra Irrgang, one of his colleagues at BayernLB. In turn, it is believed that Irrgang acquired the document from Wolfgang Eisele, a Heidelberg-based TV rights manager who had a legal battle with F1 following an anti-competition complaint he made to the European Commission in 1997.
Eisele was reportedly paid €100,000 for the document which of course means that there should be a money trail. If the payment came from BayernLB then it raises the question of why the document has not been found by the prosecutors in their investigations into Ecclestone and Gribkowsky. If Gribkowsky himself paid for the document then it raises the question of why he wanted it personally.
What could this letter have contained that would make it so valuable to Gribkowsky and how did Eisele get hold of it? Eisele was paid off for dropping his anti-competition complaint and it is understood that he negotiated this deal directly with Ecclestone. If the money was paid by Bambino, accompanied with a letter saying that it had done this as per Eisele's agreement with Ecclestone, it could be easy to interpret this as the F1 boss controlling the trust. In fact, the opposite is the case.
Ecclestone naturally has the best interests of the trust at heart and this is no surprise given that his children and ex-wife are beneficiaries. It would be therefore perfectly legitimate for him to inform the trust that paying Eisele would be in its best interests.
At the time of Eisele's complaint to the European Commission, the trust owned 100% of F1 so his anti-competition complaint about the sport could have severely damaged its value.
So where do we stand? Well, the prosecutors' case depends on proving that Ecclestone bribed Gribkowsky but their star witness has said he did not know why the money was paid. That alone calls into question whether the prosecutors can prove that a bribe was paid. They face the additional problem that Gribkowsky did not only blow a hole in their case but he also provided evidence to support Ecclestone's defence.
If the prosecutors can't prove that a bribe was paid then they can't exactly resort to questioning whether the money changed hands because Ecclestone was blackmailed. The prosecutors have already admitted that and it could be a decision they live to regret.
Christian Sylt