Let us assume for a moment that the German publications reporting that Bernie Ecclestone has alleged that BayernLB’s Gerhard Gribkowsky blackmailed him during the sale of the Formula One group to CVC Capital Partners back in 2005 are correct. It is a safe bet because they seem to have exceptionally good links to the judiciary in Bavaria, as has been seen throughout the Gribkowsky Affair. They say that Ecclestone’s official testimony is that Gribkowsky blackmailed him and that this was put on the record when Bernie went to Munich earlier this month. If the German journalists were not confident that they are 100 percent correct, they would not report it. It is never wise to libel a billionaire. There has been no swift denial from Princes Gate.
The consequence of that piece of information is an inevitable question. Bernie is famous for playing hard ball when it comes to negotiations. Threatening him was never considered to be a very wise move because he has always had a tendency to stand his ground and then hit back. So, if he is admitting to paying Gribkowsky a vast sum of money, one must ask what did Gribkowsky know that would have been worth $50 million?
If Ecclestone had nothing to hide, Gribkowsky had no story to tell. The Bavarians may not care if there is a story but someone, somewhere must be interested in that information. No-one pays out $50 million unless they feel they must. Thus the consequence of this is that people are going to start asking questions of the Bavarians, and Gribkowsky.
Fascinating though this might be, the detail is really not important. The key question is what the suits at CVC Capital Partners, the major shareholder in the Formula One group, think. Read their prospectus and you will see that they represent very conservative US pension funds. They make money and they do not like messes. They like everything to be in order. They like being snow white. Shades of grey worry them and they start to glance now and then at the door marked “exit” whenever there is a hint of trouble.
The consequence of all this is that the rumour mill in F1 circles is swirling.
joeblogsf1 
Does the rumour mill tend to believe that Uncle B will be thrown overboard or that CVC itself will move calmly but quickly to the lifeboats?
HMMMMM – well if CVC want out of a potential embarrassment I am sure their is a little man in Knightsbridge who would take it off their hands cheap – the $50M looks like it might become a tricky issue for the same guy though
sorry it should be ‘there’
Joe wrote:
It is a safe bet (the German media is correct) because they seem to have exceptionally good links to the judiciary in Bavaria, as has been seen throughout the Gribkowsky Affair.
Sure about this? The story has variously been reported in Germany as: Gribkowsky undervalued the shares, Gribkowsky bribed Ecclestone, Gribkowsky conspired with Ecclestone in a breach of trust and, now, Gribkowski blackmailed Ecclestone.
I still think it’s more speculation.
We know that Gribkowsky declared the money to the Austrian tax authorities as F1 consultancy fees. Seems there is a difference of opinion about that.
It’s quite possible Gribkowski simply paid himself a commission from the sale of the Bayern shares while slushing the proceeds around various offshore venues.
Joe, do you put any credence in the rumored interest of Murdoch/slim buying the rights off CVC?
F1Cam
I think things are happening
Let’s hope that this will not hurt the sport we all love
Full props for covering this Joe. Truly. You put the rest of the English F1 press to shame.
It’s a travesty that so few of the major English language F1 press have even mentioned these MASSIVE developments. I just searched Google news and found two (just two) English language stories on this.
This is a development that could force out the sport’s economic founder and decades long patriarch. How can Autosport and the rest not cover this? It is nothing less than Shameful.
There are actually three huge developments here:
1. Ecclestone DID make the payment (despite his -ahem- ‘denials’)
2. He has admitted he was blackmailed. (though this has long been suspected)
3. The German press have even reported the reason for the blackmail (which you haven’t reprinted, so I’ll leave out. Though it confirms many long time suspicions.)
My big question; does the German prosecutor have Gribkowsky’s blackmail material? One would think that the German prosecutor would be obliged to provide that material to any friendly government making a request.
As such, I just don’t see how Bernie can survive this.
Random,
You know more than I do apparently.
Mmm, the plot thickens but, not a surprise at these levels. When they are talking Billion$$$, 50MM is to them, like us getting a goodie bag at a trade show 🙂
50 million is a lot of hush money in anyone’s language. Doesn’t it make more sense that Bernie is just playing the victim and shedding the blame for a huge bribe at the same time? Does German law now compel him to disclose the subject of the blackmail, at least in confidence? If he was being flexible with the truth, does that constitute perjury in the inquiry? There are some big outcomes possible here.
So Bernie has something ‘buried under the patio’!
If this was Eastenders we would be now hearing the doof, doof, doof.. dudda dudda… and waiting for the next juicy installment.
However, like the aforementioned soap opera, stories that involve Formula One and Bernie have a tendancy to run… and run… and run…
Don’t hold your breath folks.
Wow. Fascinating development. I wonder if the executives at Swiss Timing / Omega / Swatch who were caught paying massive bribes to the Commonwealth Games in India (and currently are named in Interpol arrest warrants) are going to use this defense?
“It wasn’t a bribe….it was a blackmail payoff!!”
I wonder why F1 even bothers with things like DRS and KERS to spice up the racing. The off-track shenanigans in F1 are so byzantine and intriguing, who cares which team is winning the actual races?
Yeah but – didn’t Bernie deny paying anything to Gribowski?
Interesting, sounds like someone is being very clever. I imagine that would be Bernie.
“Michael C
sorry it should be ‘there’”
Are you correcting your own previous post or are you really that petty ? just wondering……
This is spinning my head.
How much is Lost In Translation?
How many UK national F1 journos, reporting elsewhere, speak Baverisch?
I cannot go into my understanding of that culture without trying to understand why the girl i loved wanted out, which i never did ever scrape the surface of, but it’s very tight, and unique. Franks, Celts, all cheek by jowel.
Excuse my personal line, which matters not. My point is that they definitely do things differently there. To the extent Berliners or Kölschen (if i even get that right, but meaning ther Cologne dialect speakers) consider them alien.
You see, i’m actually angry they hold Grib, that doesn’t seem clear to me. Where are the prosecutor’s statements? But i also somehow understand the slow burn way they deal with things there.
My suspicious mind, thinks this is way beyond Bernie. Buck does not stop there. No way. Even a cursory look at the CDU in Bavaria unearths scandals which even a New Labour government would spell abdication. Remember, it was a State – Landes – banken.
Can’t draw conclusions. But i feel arms being twisted, all along.
– j
Random wrote:
It’s a travesty that so few of the major English language F1 press have even mentioned these MASSIVE developments. I just searched Google news and found two (just two) English language stories on this.
As Joe comments, that could be to do with the punitive laws of libel in this country.
The ‘blackmail’ story was first reported in Focus and appears to be the only source. The Sueddeutsche Zeitung, which has reported most of the story, has not printed the new allegation to date . . . even though it ran an Ecclestone article yesterday.
Good on you for covering this Joe. Autosport and PlanetF1 are still too busy flouncing out the Team Lotus Enterprise press release to do the same.
Expect the former not to ever touch on this subject lest they displease the Bernie and the latter to repeat your story in about 3 hours, albeit with a direct credit admitting they read your blog on a daily basis.
Oh, on second thought, maybe Autosport has saved its in-depth analysis on the case for its Autosport Plus subscriber content and its magazine! Excuse me, but I better be off to waste money on content I can find here for free!
Yeah, right.
It’s getting to the point that F1 media groups are being encumbered by their print outlets rather than powered by them, so I reckon credible bloggers like yourself and JA have got it right.
TG
I know lots of people from Autosport but I am afraid that the other organisation is not one that one encounters in the F1 paddock.
You must never forget that the majority of F1 websites have no access and no insight at all. They simply copy off the people doing the work and pretend to be something that they are not.
Joe, is the “not” in the final para (The key question is not what the suits…) a typo? Surely the key question IS what the suit think? Nice piece though.
I wonder why Bernie didn’t go to the police if he was being blackmailed? Perhaps this is a mutually beneficial business deal gone wrong thats being twisted into a blackmail case?
If there were legitimate consultancy fees paid, then there would be a contract or legal document governing it. It would be interesting to see that!
Adrian Newey Jr,
I don’t know, but I suspect the Munich investigators will get to the bottom of it.
Is it a coincidence that Bernie has both QPR and F1 sale rumours out in the press?
Hi Joe, maybe the alleged sale of F1 is linked to the alleged, “bribery” , time will tell
Just read your piece again . . . it is a fascinating case.
Joe wrote:
Bernie is famous for playing hard ball when it comes to negotiations . . . he has always had a tendency to stand his ground and then hit back.
Gribkowsky plays hardball too. He sued Bernie twice for the banks to gain control of SLEC . . . first time he won in court and the second time Bernie backed down . . . or maybe settled?
John (other John) wrote:
You see, i’m actually angry they hold Grib, that doesn’t seem clear to me. Where are the prosecutor’s statements? But i also somehow understand the slow burn way they deal with things there.
You make some good points. Bayern LB was bailed for 30bn. Scapegoat wanted. Now those kind of losses involve more than one bank official – and certainly a State regulator or two – but only Gribkowsky is on the rack.
Slow burn? The German and Austrian banks were complicit in laundering State money from the former East Germany to Switzerland – the hearings took forever.
Recently, there was the case of Rudolfine Steindling, who laundered 230m. She began giving testimony at the age of 58 and finished age 75 . . .
If there ever is a trial, Bernie won’t be around for any verdict :-)))
I agree with Joe’s analysis that the US pension funds won’t like this business one bit, but I don’t think they’ll go so far as to demand Bernie’s ouster. To do so could risk a significant devaluation of their F1 investment.
Bernie has had 100% success in delivering up the teams and the FIA. Another man might be able to do it, but there’s hardly a guarantee.
There is another way these squeamish retirement funds could disassociate themselves from this business without forcing Bernie out, they could put even greater pressure on CVC to sell up forthwith, thereby separating themselves entirely from Bernie, the sport, and all the rest. I wouldn’t be surprised if the recent sales rumors were directly related to their pushing.
Is is a good time for CVC to sell? Probably not the best, but certainly not the worst. They’d get their best price with a new Concorde agreement on the table. Though the teams seem to be in no great hurry to sign a new agreement. and I doubt they’ll speed things along just to satisfy CVC’s desires to sell up.
If CVC is looking for a fast sale, the teams should be in the driver’s seat of renewal negotiations. The teams may be able to demand significant concessions in exchange for a new agreement.
I would like to bet money that whatever it is under Bernie’s patio, Murdoch knows what it is and is trying to strongarm his way into F1 on the back of it.
On another tack, if Bernie would like some positive press, all he has to do is to declare that F1 will never ever go back to Bahrain this side of regime change. Four demonstrators have been condemned to death today in legal circumstances which do not bear scrutiny, and there’s lots of doctors’ and nurses’ trials in the pipeline whose only “crime” seems to have been to tend to injured demonstrators.
Joe, what is our sport doing in places like this ?
Grabyrdy
And yet Bernie has just given them another month to decide if they want to hold the GP.!
Bernie’s sensitivity to most people’s opinion of countries that shoot their own, is such that we should not be surprised to see North Korea or Zimbabwe on the calendar soon.
Only when sponsors tell him will he understand, apparently several got very close to withdrawing their names from cars in before Bahrain was postponed.
rpaco,
Bernie does not have the right to give them more time. I believe that rests with the FIA And they have been silent on the matter…
copydude,
when i was on about slow burn, i took for granted “official” investigations which bury everything!
I cannot put my finger on it, but i mean the southern Germans are very quick to accuse, and very slow to come to conclusions, by my very personal experience.
You probably have to delve hard into folklore, to understand that. I grew up amidst green forests, not half as nice, and felt a connexion there. Dark nights among the trees are great spiritual places. Die Zauberflöte remains my favourite big opera. (see if you can find the one filmed at Glyndebourne for making the audience part of the overture).
I’ll try to surface my point, for a moment, at risk of getting it entirely wrong: swirling boughs in the dusk make for jumpy people who nevertheless must remain calm, or the hunt is off.
There is, however, no Papagena for this story, as yet. Maybe Grib is Tamino, calling out . . .
forgive me, i love the metaphors.
– j
I’m some what confused with this story, (not just because I haven’t got my mind round how banks operate if that is at all possible to understand) but doing a quick search it seems the blackmail subject was Bernie’s business structure. But surely that would have been found out long before now? And in the fact that the tax people gave clearance for his of shore trust fund (unless they didn’t) and I’m back to square one.
Something doesn’t feel right about this. I wonder, if Mr E paid Mr G $50 million to keep something under his hat (blackmail or otherwise), wouldn’t going to the prosecutors and telling them about it defeat the purpose of paying the money in the first place?
rpaco,
maybe Bernie likes handing out rope by the yard? 🙂
best from me,
– j
kookiez,
at least one component of BE’s private commercial history is SLEC, which was handed to a blind trust o.b.h. Slavonica et. issue.
Without accusing, there was a wonderful moment you may remember, in a certain movie, i’ll leave to your imagination:
“Do you trust your wife?”
– j
John O
Apparently it’s not his own rope!
copydude,
the tricky thing with libel, has been how much jurisdiction hopping has been going on.
New Yorkers having it out here over books distinctly published by RH in NY,NY about people living in the Big Apple . . .
But recently, one case was thrown out, where a website origin overseas was ruled not to be british legal subject, not publishing here. So the very finely drawn but often commercially devastating precedent that transmission to equalled subject to local law, is now bent a little straighter. It’s not legal argument, so much as detailed precedent, and these things often as not, sort themselves out. Kinda, someone spots the nail, but no-one has a hammer.
This point about transmission, often rides on a obscure (unless you do business, when it really is no longer obscure) case, explained here:
https://secure.wikimedia.org/wikipedia/en/wiki/Entores_Ltd_v_Miles_Far_East_Corporation
That one is very helpful, for understanding the construct of jurisdiction, as it follows from action, presumed or real. Read the summary as a “historical” curio, but the decision is a tour de force of clarity.
That’s only one swallow, does not a summer make. Else we’d have to join Joe in a chorus of La Marseillaise 🙂
In my reading, i sorely miss the humor of Laddie, in these legal parts. I may have linked this before, but this gives you a taste. Sadly, i never had the privilege of his audience. This is really a case of the good dying young, no matter we may like to make fun of the judiciary. Laddie was sui generis.
http://williampatry.blogspot.com/2008/11/in-memoriam-sir-hugh-laddie.html
as to the blog writer, consider the source!
best from me,
– john
rpaco,
point, pal, you’ve got a point there!
cheaper to thumb to nose the yarn if someone else’s, but it has strings attached?
– cringing deeply –
p.s. got it, “John O” first use here!, to my friends, i guess . . Keep it under your cap, my browser has the usual one saved, and i’m lazy . . 🙂