High court case dismissed, but Ecclestone payment ‘corrupt’

Formula One chief executive Bernie Ecclestone has won an important legal battle in London, as the 83-year old awaits the start of a criminal trial in Germany in April.

Formula One chief executive Bernie Ecclestone has won an important legal battle in London, as the 83-year old awaits the start of a criminal trial in Germany in April.

A High Court judge ruled on Wednesday that a civil case brought against Ecclestone by German media company Constantin Medien be dismissed.

Constantin Medien had claimed that a US$44 million payment made by Ecclestone in 2006 to Gerhard Gribkowsky, a former chief risk officer for German bank Bayerische Landesbank (BLB) responsible for selling his company's 47 per cent stake in Formula One, helped to smooth the passage of CVC Capital Partners takeover of the sport. Constantin, also a shareholder in the sport, believes Gribkowsky deliberately undervalued Formula One following the payment, denying it the increased commission it was due if the shares had sold for a higher sum.

Ecclestone, who appeared at the High Court in December, has never denied making the payment, but argues that he did so because he was effectively being blackmailed as opposed to offering a bribe. He said that Gribkowsky had threatened to land him with a costly and lengthy investigation by UK tax authorities into the financial affairs of the complicated group of companies which control Formula One.

Gribkosky was convicted of tax evasion and bribery in 2012 and is currently serving a prison sentence in Germany.

Announcing his decision on Wednesday, Judge Guy Newey called the US$44 million payment 'corrupt', adding: 'The payments were a bribe. They were made because Mr. Ecclestone had entered into a corrupt agreement with Dr. Gribkowsky in May 2005 under which Dr. Gribkowsky was to be rewarded for facilitating the sale of BLB's shares in Formula One group to a buyer acceptable to Mr. Ecclestone'.

However, he added: 'It was no part of Mr. Ecclestone's purpose for BLB's shares to be sold at an undervalue…No loss to Constantin has been shown to have been caused by the corrupt arrangement with Dr. Gribkowsky. That fact is fatal to the claim against all the defendants.'

Referring in particular to Ecclestone's appearance in court, however, Judge Newey said: 'Even making allowances for the lapse of time and Mr. Ecclestone's age, I am afraid that I find it impossible to regard him as a reliable or truthful witness.'

A Constantin Medien statement, issued just after the case was dismissed, said: 'In Constantin Medien AG’s proceeding against Bernard Ecclestone, among others, the High Court in London rejected a direct claim against Ecclestone and his family foundation. At the same time, the court viewed as a proven fact that Ecclestone bribed Gerhard Gribkowsky, the chairman of the board of directors of the Bayerische Landesbank, for the purpose of selling Formula One to an owner preferred by him. The court also deemed as proven that Ecclestone was aware of the danger that the sale was conducted below value. 

'Constantin Medien AG further assumes that the company is entitled to claims based on the findings of the Regional Court in Munich regarding the criminal proceedings against Gerhard Gribkowsky and today’s ruling of the High Court in London. Constantin Medien will further pursue its claims and appeal.'

Although Wednesday's decision is a major boost to Ecclestone, a criminal trial in Germany is still set to begin in April. Munich authorities confirmed that in January, following a long investigation.

He has stepped down from Formula One until the trial is over, but remains chief executive. CVC, Formula One's controlling shareholder, said at the time that 'the board believes that it is in the best interests of both the F1 business and the sport that Mr Ecclestone should continue to run the business… but subject to increased monitoring and control by the board.'

A third case, in which Ecclestone was being sued by US firm Bluewater Communications, a company which claims it offered 10 per cent more than any other bidder for BayernLB's stake in 2006 and therefore lost out heavily when Ecclestone paid Gribkowsky the US$44 million, was thrown out by the New York Supreme Court's commercial division in January, on the basis that the court did not have jurisdiction.

The legal cases have highlighted the apparent lack of a succession plan at the top of Formula One, with Ecclestone continuing to run the sport on a day-to-day basis in his ninth decade. CVC co-founder Donald Mackenzie told the High Court in December, however, that Ecclestone would be sacked should he be convicted of a crime.

Share

Related content