Bernie Ecclestone’s legal troubles continue to escalate. There is a new challenge in a New York court in recent days from a private equity group called Bluewaters Communications Holdings that is claiming $650m, alleging that Ecclestone conspired with CVC Capital Partners, Gerhard Gribkowsky and BayernLB conspired to sell the company at less than its real value. CVC bought the business from BayernLB in 2005 for $1.6 billion. Bluewaters was established by John Gregg, formerly of the NTL company, who put together an offer involving a number of other private equity groups. He claims that Bluewaters was the highest bidder and submitted a written offer and agreed to pay 10 percent more than any other bidder. The lawsuit claims that it lost out on the deal because of a payment made to Gribkowsky.
Is where the figure of $650m BLB are claiming in lost revenues comes from? Its a bit of a long shot for a chancer unless it has proof of it.
They cite specific shareholding activities by CVC since the acquisition. $1bn dividend and the capital profit on the 2 share disposal transactions earlier this year. http://wp.me/p2HWOP-v8
Surprised BE didn’t have the foresight to ‘purchase’ a law firm. He’d have made a killing had they been deployed on all the legal issues subsequently created by him.
I think you will find Bernie already has one. He employs at least 7 solicitors at FOM HQ.
They seem to be coming to the party rather late.
Their case relies on Gribkowsky having been bribed by Ecclestone. Bluewaters therefore had to wait until Gribkowsky had been convicted in order for this to be established as legal fact.
CVC paid £1,038,818,380.
Bluewaters Communications holdings offered 60.45% of that figure.
Interesting. Thanks.
Did they pay the sum nominated above for both Bayern and Bambino trust’s shares or just Bayern (banking group) shares?
In my simple naivety, why would Bluewaters believed actual offer be so low when they claimed to have had funding that would have allowed them to get much closer to the best offer plus 10% assertion?
Bluewaters may have waited until Gribkowsky was convicted as this appears pivotal to their case. Will the fight boil down to the reliability of email and surface mail vs the reliability of Gribkowsky?
Last I read, Grib changed his plea. Unless I’m mistaken and there are outstanding or new issues they intend to try, a trial was thus conveniently avoided, and Grib’s attempt at a pleas bargain backfired or was reneged upon and he got close to the max.
I do imagine however, there might be very worthwhile information on file that was never used, in the Grib case, and finding means to access or compel disclosure of that would be a attractive goal. I am not sure there’s a means to attain that goal, but that situation does seem to remain very important, and the whole of it smells rotten.
If Bluewater offered only 60% of the CVC bid why did Bernie allegedly pay Gribkowsky a bribe? At that price differential CVC would certainly have gotten F1 and the alleged bribe would have been wasted. Bernie did receive money from CVC and the bank that more than covered the alleged bribe; what’s wrong with this picture? And a final note, wasn’t Gribkowsky convicted of receiving a bribe? Is the bribery still ‘alleged’?
Bluewaters state in their court submission they offered Ecclestone $1B (£650M) for the bank’s 75% of SLEC shares, as I understand the Bambino 25% SLEC holding wasn’t open to offer at that point in time.
Pro rata that would equate to £866M were it to include the Bambino trust 25% SLEC holding similarly priced, and an offer that would be 17% or so less then CVC’s, a far cry from your very precise 60.45%.
Crucially they also state their offer included their willingness to match the highest bid plus 10%.
???????
i telephoned that long number of CVC and was put through to an elderly gentleman who spoke wise words.
As for the 60.45%, he says that was his overdraft limit…
It’s a well-plead complaint.
No wonder a certain parrot was so keen to keep repeating over and over again, when the Gribkowsky thing first broke, that there’s no way that F1 was undersold, and that a bribe for doing that (and keeping Bernie in control) wouldn’t have made any sense given that CVC’s was the highest offer anyway… and now we find out that allegedly, it couldn’t have been, given that 10% clause. Ah…and a quick check now reveals that the parrot has changed its, er, squawk a bit. But only a bit.
It must be irksome to have your secret illegal deal usurped by another one.
Joe,
I’ve read previously on this website and others that there is speculation that Bernie has conspired to sell the FOM business for a knock down price. But what I don’t get is – WHY? As I understand it when FOM was sold to CVC, Bernie (either directly or through one or more trusts) was one of the major shareholders in the business being sold. I can well believe that Bernie frequently bends the rules to allow him to pull a magic rabbit from out of the proverbial hat, but I just can’t get my head around why he would conspire to sell a business in which he was a significant shareholder for even a penny less than he thought he could get.
Maybe I’m being simple, but any insight or theory’s you may have that can shine a light on the WHY (even if not the who/how/when) would be appreciated.
Thanks,
Mike.
You have to remember the context of the sale. At the time Bernie was trying to legitimise his “ownership” of the sport. There were plenty of other parties (the teams, the FIA, etc) who thought they were the rightful owners.
Thanks for that, something like ‘possession equals nine tenths of the law’
One theory is that Bernie’s interests were more in line with the buyers than the sellers.
Remember, at the time of the sale Bernie had already sold the F1 companies, TWICE. He still controlled them – through a truly opaque series of shell companies, but he no longer held full ownership. He had already largely cashed out.
CVC was buying the F1 companies from a handful of banks. The banks had taken reluctant ownership after foreclosing on the bankrupt concerns Bernie had sold to. That’s where the infamous Gribkowsky came in. The banks wanted F1 off their books and Gribkowsky’s job was to wind up all the shell companies, a feat he accomplished with surprising savvy.
So why would Bernie want to sell the F1 companies at a knock down price? Why not? They weren’t really his any longer.
There are many who suspect that Bernie has been a large beneficiary to the massive returns CVC has seen since purchasing the series. The theory is that Bernie or his family trusts became significant investors in CVC around the time of the purchase.
One can only wonder why the German courts haven’t investigated this line of reasoning. It would provide the clearest yet motivation for some of the actions taken.
According to the lawsuit, his main reason was to retain control of F1 (day to day running etc.). Once the banks ended up with 75%, they wanted out, so he manipulated them so that CVC would win as they agreed to leave him in charge.
This happens when you mess with the money suits.
Here is more: http://www.pitpass.com/images/pdfs/2012_bluewaters_lawsuit.pdf
Thanks for the link, very interesting reading
You’re new here, right?
Citing Pitpass on Joe’s blog is downright funny.
LOL, but it gets a – ahem – pass – because it’s the first factual thing linked there!
Read the court document. If they (Bluewater) are able to produce documents to back up this filing they have a strong case, IMHO. I commented above that they were late to the game, but after reading this filing I think they may BE the game. I suggest Bernie may be sweating right now.
Seeing the source I had expected a whitewash article but instead it is a copy of the lawsuit. anyone studying the history of F1 should read it.
If won it virtually makes the current F1 ownership illegal.
We have been waiting for a claim such as this for a long while now. But I hope they realise that they are dealing with a barrel of eels. Actually a barrel of hagfish may be more appropriate.
This will be settled out of court long before any kind of official legal judgement can be made on the legality of the current F1 ownership.
You could well be right as the amount claimed seems very modest indeed. Well worth settling. I had expected the claim to be more like $4Bn which would represent most of the profit CVC have extracted so far. However this lawsuit by it’s very existence, does bring CVC into disrepute and makes them, in collusion with Bernie, worth a stab at an “unfit for office” motion via the FIA commission.
Joe. It has just dawned on me. Shouldn’t this development have been revealed during the criminal trial of Gribkowsky? The valuation of F1 was one of the main points in the trial from what I remember reading. If Bluewater had evidence that it was the highest bidder then did it have an obligation to make this disclosure in court? The given reason is that F1 was sold for less to CVC because it agreed to keep Ecclestone as the controller. Bluewater made an offer of plus 10% but did not guarantee to keep Ecclestone. The court said that Gribkowsky received a bribe from Ecclestone to sell F1 to CVC and if this is true then the evidence of Bluewater would show that there was a loss for the bank which sold F1. It is an incredible important point so why was it not revealed in the trial of Gribkowsky? Is it acceptable to keep such evidence quiet?
I doubt Bluewater were even asked. But I am sure that someone has a transcript of the whole trial and can verify one way or the other.
As far as I knoiw, in certain countries you are obliged to come forward if you have evidence directly relating to a criminal case. But which country would this fall uder: Britain, Germany, America???
Reading the complaint document, Bluewaters aren’t just after the ‘very modest’ amount of $650m as repeated in various media headlines.
They are actually asserting that CVC, Bernie and his various shell companies and Gribkowsky “must disgorge the profits rightfully belonging to
Bluewaters.”
In total they are claiming fees and costs, punitive damages for the defendant’s criminal conduct, and compensatory damages in an amount not less than $650m.
Taken overall that could add up to a very significant amount of money and if they’re successful in any way, expect other parties who would’ve been due for a proportion of any profits to line up for their go as well. It could all end up being closer to a few billion by the time it all finishes.
I see a book, documentary or movie to be made out of all of this. It is very fascinating stuff
Ah I’m sorry, but a question of rights will arise.
Ambulance chaser ‘shakedown’ special. Kick their Arse Bernie!
Read the court filing, you might change your mind.
CVC were by far the highest bidder.
And how do you know that?
You are new to this blog, aren’t you? Karen is one of Bernie’s lawyers – although she does not admit it.
Let say Karen is B.E. lawyer the question is:
Why would she post on this forum on this subject?
Is there substance to this story?
Fraud, in any business negotiation is bad. Just look at what happened to Hewlett Packard.
She is what I have told you she is. Just accept it.
So what if she is the lawyer. Why does that make TJ’s comment less valid?! If the Bluewater was offering 10% more then how could anyone be sure that CVC was the highest bidder? That is a valid question.
Because the offers are recorded…
Bluewater offered, in writing, 10% more than any other bidder so unless they were followed up (which, according to the court filing, they were not) it is not possible to know that CVC were the highest bidder. Therefore TJ’s comment is very vald. In fact, it is at the heart of the entire case.
My remarks were not clear. Sorry. I accept it and think there is truth to the complaints if a lawyer is posting on forums.
Maybe you’re right and she is, but frankly she’s not convincing me.
I know it is sometimes hard to accept things when you are wrong, but just accept it. Why on earth would I tell you that if it was not true?
Joe I am sorry for not explaining myself clearer. I did not mean offence to you or Karen. I believe that Karen may be the lawyer but that is not relevant for what I am saying. My point is that unless the Bluewaters was contacted about its offer to pay 10% more than CVC then Karen can not know that CVC was the highest bidder and TJ is right. The lawsuit from Bluewaters says clearly that Bayern LB did not return the calls about its offer of paying 10% more than any other bidder which proves we can not know CVC was the highest bidder. Of course the lawsuit may not be true!! Since Karen is the lawyer for Ecclestone then she can tell us about his response! I have looked at the lawsuit on the link above and noticed at least one factual error – there must be more…
If it has taken this bunch nearly seven years to make their case I would guess they are just shysters seeking some free money. Picking on Bernie for free money is likely to end in disappointment…
The question is whether any material information has come to light at a later date. Not familiar with statutes of limitation in NY, but in the UK limitations run from the time of discovery – or arguably the reasonable expectation of discovery – of a tort (wrongdoing). It is perfectly possible, with financial instruments, you do not find important information until a long delay has passed, particularly with stocks or bonds that trade thinly, rarely, or hardly at all. The trigger appears to be the recent transactions. I’ve not the leisure to really enjoy a thorough read, but I agree so far with cvrt, it’s well plead, very clear reading at my first glance. (though I expect cvrt looked much more closely than me).
Anyone else just a little sad we have a off season of litigation as a fixture feature in the year? It’s all fine to use it to keep my mind exercised, but it feels like with every case, no matter the plaint, F1 becomes that little bit farther removed from a better future.
No John, I think it will give us interest over the closed season. For many it’s only about the racing, but this is like saying you are not affected by politics, which in fact affects us all far more than we would like.
I was being disappointed, rpaco, I just had more politics mainlined involuntarily into my private life and business that I could ever normally cope with. So, yes, I am wrong, and I expect I will come back and look hard at all these cases and try to find better sense of them. Surely it is a sad thing, to feel I need to go to that effort to understand this sport? I think what happened is I got inured to nonsense lately, and so took this flippantly. My comment was not meant as sarcasm. I just do not know what to make of yet another miserable mess.
Without Gribkowsky’s conviction, an action like this most likely wouldn’t have been tenable, so the delay is logical. Even now, it seems to me that they still have a lot to prove – but if the German authorities were to prove some of it for them, that would help. However the fact that the Germans are investigating BE but haven’t charged him yet must indicate that suggesting is one thing, but proving beyond reasonable doubt is quite another.
I think the message that should be taken is that Bernie Ecclestone should be “retired” or “released” from his involvement in F1.
Whether there is a case – this is not good publicity.
I would expect every company that was part of the bidding process will be lining up their own court challenges since there is proof of fraud. This may be the first of many claims.
Perfect timing for this, right after a successful US GP and the title finale in Brazil. To paraphrase Wilde, we are all of us in the gutter, but some of us are looking at the stars.
That’s a shame you didn’t post my previous comment!
I am sure there was some reason for it. I publish everything unless it is libellous or so stupid it annoys me.
Oh Karen, have you and you colleagues ever got your work cut out!!!!
Still on the bright side, you will be able to retire after this, unless you are working on no win – no fee.
What is the likelihood of an experienced or successful businessman making a written offer saying “we will pay 10% more than the next person”? That sounds like a negotiating position but one would be foolish to make it as a written offer.
Also 10%? With the number we are talking about that is an atrocious amount of money to over pay.
Actually, it would be nice if Karen posted here more often, not to implicate people but to give some occasional answers to little quirky questions about F1 that wouldn’t otherwise come out, like her post above.
She does exactly that.
Yes, but it would be nice to hear more from her.
http://tiny.cc/zuy4nw
Will be interested to see which NYC law firm is retained by CVC/BCE to defend and if their first move isn’t to attempt to have the case removed to Federal court.
One can imagine Bluewater’s lawyers working on a conditional fee arrangement, (no win no fee) because of the big numbers involved.
How many other parties where bidding?
What are the terms and conditions for the bidding process?
Aren’t all F1 contracts governed by English law?
If Bernie’s involved it’s on the back of a 20 packet of Gold Leaf, so pretty comprehensive and watertight.
From the complaint: “Several New York-based law firms were involved, including DLA Piper for Bluewaters. Apollo (which was to be the lead
investor) retained the New York law firm of Wachtell, Lipton, Rosen & Katz. King Street also had New York counsel from the law firm now known as WilmerHale.”
In addition to the firm representing Bluewaters in this action, Arnold & Porter, these attorneys are decidedly not “shysters” or “ambulance-chasers” as some have characterized. I would be very surprised if they didn’t have significant records that memorialized every action/reaction,discussion,response etc etc.
Any truth in the rumor that The Bolts ticket to Brazil is one-way?