The trials of Bernie Ecclestone

There are many different ways to skin a cat. When the Federal Bureau of Investigation could not pin the Saint Valentine’s Day Massacre on Capone and his gang, they convicted him of charges of tax evasion and put him inside with an 11-year sentence, heavy fines, and legal claims on some of his property. At the time Capone was only 33 and was duly paroled after seven years, but by then he had lost his grip on the criminal empire he had created and was a busted flush.

This is not to compare Bernie Ecclestone to Al Capone but rather to illustrate that the authorities in many countries are capable of solving problems in different ways. It is pragmatic, but effective. The charges that have been levelled against Gerhard Gribkowsky allege that the German received $US44 million in bribes from Ecclestone, who in return – it is claimed – received $41.4 million in commissions from Bayerische Landesbank, the state-owned German bank, which owned a majority shareholding in the Formula One group. The Ecclestone family’s Bambino Holdings trust was paid a further $US25 million. The Bayerische Landesbanke has said that it was not aware of any commissions being paid. The conclusion of the Munich prosecutor was that the payments to Gribkowsky from someone called “Bernard E” were disguised as consulting contracts but were really just a bribe. Gribkowksy did not pay German tax on the money

“The Bayerische Landesbank incurred damages of almost $US66.5 million as a result of the conduct of the accused,” they said in a statement.

Thus far, Ecclestone has not been charged and it is argued in the media that the prosecution service intends to wait until Gribkowsky’s trial – probably this autumn – to see what happens before deciding whether to charge Mr E. There is no question also that Gribkowsky’s opinions in these matters will carry some weight. If he comes out and defends himself by attacking Ecclestone then the prosecutors may then decide to act against Bernie. It seems that everyone is in a stand-off against everyone else…

What the prosecutors do not want is to make accusations that do not stick as this would be an embarrassment for them and for the Bavarian government, which looks stupid enough already when it comes to dealings with the state-owned Landesbank.

Ecclestone has told The Daily Telegraph that he did not do anything wrong and that he paid Gribkowsky because he was threatening to report him to Britain’s Inland Revenue as being the real power behind Bambino.

“He threatened that he was going to say that I was running it,” Ecclestone said. “He was shaking me down and I didn’t want to take a risk. Nothing was wrong with the trust. Nothing at all. He never said to me if you don’t give me this I will say that. He left me with the fact that could he do it or not.”

One might argue that an innocent man would not have paid up but Ecclestone’s argument is that his legal advisors told him that it would end up with an investigation, years in court and would cost a fortune.

This is an interesting argument. The legal profession is well known for its expensive tastes, but three years of legal bills are unlikely to have added up to more than $44 million.

The impression that Ecclestone is giving is that he is working with the prosecutors on the case but their activities seem to suggest that they may not actually believe him. The key point here is that the charges against Gribkowsky have come out in the same week as the German GP. This is not a coincidence. It is interesting to note also that just before the British GP there were one or two pre-emptive stories leaked out in Ecclestone-friendly outlets that he might face charges in the run-up to the British GP. This is did not happen but two weeks later the charges against Gribkowsky have come out in the run-up to the German race. This means that they get a great deal more media coverage because the race is in the news. One might be forgiven for thinking that this is a form of trial by media in place of a more formal process and that the goal is to make CVC Capital Partners, the owners of the Formula One group, so uncomfortable that they decide to more Ecclestone sideways to a new role, to save their own reputation. The venture capitalists deal with a lot of prim and proper American pension funds and for them stories like this are like having tomato ketchup from your hot dog spilled on a crisp white suit. An investment business needs the complete confidence of investors and messy businesses like this do not help.

In any case, even if the Prosecutors were to charge Ecclestone and he was to go to court in Germany, how many men aged 80 get sent to jail these days? For those who can afford expensive legal brains, there are always ways to get out of such things (or delay them) with claims of poor health etc (a la Pinochet). It may be that the the prosecutors feel that the best way to skin this cat is to leave the media to use its knives to do the most damage.

Ecclestone cannot easily fight such undermining of his position, without having to go to court to clear his name – and one wonders whether he would be keen to take such a bold step. In the interim one must also consider that a little bad publicity is very useful when you are trying to sell something as it tends to bring down the price and make the item more attractive to the potential buyers and less attractive to the seller. If one wants to stay in charge the best course of action is to find an ally in a buyer and guide them through the process.

That might be construed to be a clash of interest, but playing on the high wire with the big boys of global business has long been Bernie’s real game and where he gets his thrills.

While all this is entertaining enough for those gawping through the shop window of F1, one must ask whether it is really any good for the sport.

A bit of soap opera is all well and good (particularly when the drivers are basically a dulled lot – thanks to sponsor pressure to conform) but is sleaze really good for business?