Court case against Ecclestone over F1 sale starts
LONDON (AP) — Two days after Sebastian Vettel won his fourth Formula One title, the spotlight shifted to London’s High Court and the latest case that leaves the motorsports series’ boss Bernie Ecclestone’s future in doubt.
The longtime commercial head of F1 is already under investigation in Germany over an alleged payment of $44 million relating to the sale of the racing series in 2006.
A German court won’t say until next year whether the 83-year-old Ecclestone will stand trial on charges of bribery and incitement to breach of trust.
German banker Gerhard Gribkowsky has already been jailed for taking the payment from Ecclestone. Gribkowsky was in charge of selling the bank BayernLB’s stake in F1 to investment group CVC Capital Partners.
Now at the London trial that began on Tuesday, former F1 shareholder, German media company Constantin Medien, is suing Ecclestone and three other defendants for up to $144 million, claiming F1 was undervalued at the time of the sale.
Ecclestone — estimated by Forbes magazine to be worth $3.8 billion — was not at the High Court but is expected to give evidence next week.
Philip Marshall, representing Constantin Medien, accused Ecclestone of making a “corrupt bargain” with Gribkowsky “to facilitate a sale of the Formula One Group by a purchaser chosen by Mr. Ecclestone in return for remuneration (for Gribkowsky) and a position (for Ecclestone) relating to Formula One going forward.”
To that end, Constantin Medien is claiming it lost out due to the deal negotiated by Gribkowsky. Gribkowsky is a defendant in the case along with Ecclestone’s lawyer, Stephen Mullens, and the Ecclestone family trust, Bambino Holdings.
Ecclestone and Bambino benefited by more than $1 billion from the sale of the 47 percent stake, according to Marshall, figures that gave F1 an enterprise value of more than $3 billion in “stark contrast” to the actual value of “just in excess” of $2 billion at the time of the sale.
“We see this transaction as being significantly weighted for the benefit of Mr. Ecclestone and Bambino, and significantly to the detriment of BayernLB,” Marshall said.
Ecclestone is accused of paying Gribkowsky $44 million from 2006 to 2007.
“A variety of means were used to conceal the fact the payments were made,” Marshall said.
Marshall said the judge would have to decide whether the payments were corrupt and if they resulted in the stake being sold at a “significant undervalue.”
Robert Miles, the lawyer representing Ecclestone, said Constantin Medien’s claim “lacks any merit.”
“This is an artificial, manufactured, complaint,” Miles said, insisting there was “no conspiracy” and Constantin “suffered no loss.”
Miles said in 2006 it had been arranged that Gribkowsky would be given a “consultancy package” and Ecclestone received “tax threats”.
Ecclestone built his powerbase in F1 from the 1970s and helped to create the Formula One Constructors’ Association that controlled the business side of the series, including selling the TV rights.
The British-based company later became known as Formula One Management. It has fought regular tussles with the teams over finances, but has retained control of the global motor racing extravaganza.
CVC, having amassed a 63 percent stake of F1, has reduced its holding as other investors have come on board in recent years, although a planned flotation has stalled.
Ecclestone’s holding has been diluted to about 5 percent.