Gribkowsky gets eight and a half years

Former Bayern LB banker Gerhard Gribkowsky was convicted of breach of trust, tax evasion and bribery for the $50 million received from Ecclestone during the sale of Formula One in 2005. In his concluding arguments the state prosecutor Christoph Rodler argued that Bernie Ecclestone, who paid some of the money, was not the victim of extortion “but the accomplice in an act of bribery”. Gribkowsky was sentenced to eight and a half years in prison. Gribkowsky had told the court in Munich last week that allegations that the money he had received from Ecclestone were bribes were “essentially true”. It remains to be seen whether Ecclestone is now officially investigated by the Bavarian prosecutors. For the moment he has not been charged with anything. Some believe that the Germans will not bother because it is really a case of one man’s word against another. However, not launching an investigation might be deemed as bad publicity for Germany, as such an action in such a high profile case might result in foreign businessmen being less worried about bribing German officials.

Germany is a signatory to the Organization for Economic Co-operation and Development (OECD)’s convention on bribery, signed in 1997. The penalties for bribery under Section 334(1) of the German Criminal Code, are a sentence between three months and five years. However those involved in more serious cases can be imprisoned for one to 10 years.

Ecclestone’s explanations left a number of questions to be answered and that has attracted the attention of the British tax authorities. They want to understand how it was that Ecclestone AND the Bambino Trust both decided to pay Gribkowsky when Ecclestone is not supposed to have any influence over decisions that are made by the Trust. If the tax people conclude that he used influence to get money from the trust, they may try to have the trust arrangement revoked, which would mean that Ecclestone and his family would have to pay billions to the British government in tax. That would take years to achieve

Whatever the case, none of this is going to help the sport.

82 thoughts on “Gribkowsky gets eight and a half years

      1. Please explain. Personally I can see Mercedes moving to the WEC where they will be joined by other manufactuers. F1 will go into meltdown before rebuilding.

      2. Exactly, through the use of offshore bank accounts they paid tens of millions of US$ in bribes to officials of at least 22 foreign governments between 1998 to 2008.

        They admitted paying the bribes and were fined US$185,000,000.

        1. If they are to leave it could be more due to the fact that they are not getting a good deal rather than taking the moral highground then.

    1. They don’t have deals with Bernie. Bernie is an employee of the company they do have deals with. Nothing here sticks to CVC or Delta Topco. IF (and I emphasise the IF) Bernie is found guilty of wrong-doing then that guilt attaches to him in his personal capacity.

  1. Bernie Ecclestone corrupt? Never! He’s always seemed like such a nice trustworthy chap. Seriously, if they’ve just convicted Gribkowsky for taking bribes they must now turn their attention to Ecclestone for making them. He was quite possibly the instigator.

    1. As I asked before, in Germany will Gribkowski’s word now be taken as the truth? If so, the same court must automatically convict Bernie, indeed they already have made statements to that effect. Bernie has to sue!

  2. I’m not the most clued up of blokes – however, from what I’ve observed, hasn’t this day of reckoning for both BE and F1 been looming for some time? Things have changed in the world – they both seem to be slow in the catch up. There seems to be the need for some kind of karmic balance to be achieved, and a line drawn under the BE era. After the bloodbath, of course. As a fan of F1 racing, that is the worry.

  3. Given the current atmosphere in the UK of making examples of prominent people I can see Bernie being singled out. Must be the first time he’s has ever been a victim of the Tall Poppy Syndrome….

  4. Gribkowski gets 8 and 1/2 years for bribery what would Eccles get for fraud and cheating the taxman of billions of pounds, i suppose he will escape with a knighthood….

  5. Rarely are the bribe givers convicted, it seems like it’s always the takers, and the givers usually get away with little or no punishment.

    I can only believe that CVC selling off vast chunks of F1 shares is their way of shielding their investment from future legal actions if they are caught up in any of Bernie’s legal flack.

  6. Looks like Bernie finally faces somebody who does not believe his BS. Of course making a case of it is a different issue. He will drag it out in the hope he croacks it before a judgement can be made. I must say it does not give me little pleasure to see a fat cat taken down a peg or two. Have nothing against capitalism, but the last few years have convinced me our current system is broken.

  7. Bad news for Bernie then I guess!?

    Which means bad news for Merc?

    Which means Michael is without a seat next year?

    One last year back at Ferrari maybe? or Webber to Ferrari and Michael to Redbull? 🙂

  8. So who are the official trustees of Bambino Joe?
    Can they be charged with bribery as well?
    And then there’s Flav.

  9. If the courts do not bring sanction against Ecclestone, it will bring shame
    on the whole of F1.

    Of course it may do that regardless.

    I’d like to see Ecclestone serve prison time, but I doubt that will happen.

  10. “but the accomplice in an act of bribery”.

    Strong words indeed. Surely they’ll have to go after him and the HMRC will too?

  11. mark powell – one wonders why Mr. E hasn’t been given a Knighthood already. He IS 80-something, after all…..

    I also wonder why a certain (independent) website hasn’t reported any of this yet. Just wondering….

    1. Funny that. Still we know that its Business Editor knows all the answers so I expect he will admit publicly that he was wrong.

  12. Bernard claims he didn’t bribe the unpronounceable Gribkowsky, but paid him millions so that he wouldn’t “tell fibs” to the UK Axe man.

    In other words, “I don’t pay bribes, but I’m generous to anyone who wants to blackmail me.”

    This from the man who resisted thieves attempting to pull a diamond ring off his wife’s finger in the street!

    What does that tell you?

  13. sorry joe..i don’t see where it remains to see..if u put a guy in jail for eight years..you also take down everyone else “not a victim but accomplice”

    1. Ask a German about how their justice system works. In principle I agree with you, but it is more complicated than that.

  14. Without saying whether it’s right or wrong, I do think stories like this one and the on-going flotation saga are given too much prominence by those who are ‘inside’ F1. I doubt the average geezer who watches F1 every now and then is too fussed and as a result I doubt the sponsos who want that geeer to buy their stuff now and then will be too fussed. It’s like stories about the inner workings of media-land getting absurdly high coverage on the BBC – journalists not quite appreciating that what’s “big news” in their corner of the World isn’t of equal interest to all <– that's not a dig at you Joe, btw, as an F1 journalist you are obliged to cover issues relating to F1 – but I'm not sure many beyond the hardcore fans are bothered by this apparent 'scandal'.

    To be honest, you'd have to be stupid to not realise there's all sorts of shennanigans going on behind the scenes in F1, just as there are behind the scenes of any Global sports or entertainment racket.

    1. If F1 fans do not understand that this scandal could have serious implications for the sport then they are fools.

      1. Ture, but that depends how you define a ‘fan’, though doesn’t it? The vast majority of F1’s audience are people who watch a few races a year without having a significant ongoing attachment to the sport. They don’t religiously check up this or any other F1 blog every morning, they don’t buy Autosport magazine and so on. So far as the majority of F1’s “customers” are concerned, they turn on the telly and theres some famous names racing their cars around a track – they’re not really interested in the technical, sporting or political and commercial issues going on behind the scenes.

        Motor racing exists because motoring enthusiasts like racing cars and other people like watching cars race. F1 as we know it exists because car manufacturers, sponsors and promotors – Bernie notably among them – have realised commercial opportunities connected to that activity. In a worst case scenario, this all kicks off a detailed investigation in Bernie’s activities and as a result he and different organisations connected to F1 and he’s banged up and they’re barred from further participation. This might muddy F1’s waters on a moral perspective, but motor sports and F1 will still exist (maybe in a different form to as it does now) simply because people want to race cars, others want to watch cars racing and still others will try to make money out of them. Certainly Bernie and the current owners being ruled out would cause a lot of significant repercussions but it wouldn’t mean F1 (or a replacement) will cease to exist.

        Think of the recent great scandals of F1 – McLaren pinching Ferrari’s designs, Renault ordering one of their cars to crash so the other can win, etc. Outrageous in some ways, and an affront to the moral integrity of the sport – but outside of the world of the participants and the hardcore fans, neither made much difference, did they?

        1. Scandals have a massive impact in F1. Look at how many corporates abandoned Renault after the Crashgate incident. Teams are finding it very hard to get sponsorships. If the sport were tainted badly enough, a lot of “whiter than white” corporates may decide to pull out. If the survival of teams becomes an issue, that might force the owners of the F1 to dig into their own pocket to hand out a greater share of revenues. Hence, it becomes an issue.

          1. I don’t think teams are finding it hard to get sponsors because of crashgate. Indeed the team involved in crashgate seems to be doing quite nicely. There’s a global financial squeeze on. Barclays are currently reviewing all their sponsorships. They can’t renege on them, but it seems likely that most will not be renewed. Also some teams battling for sponsorship are not particularly attractive to sponsors because their performance is not particularly eye catching. ‘Twas ever thus.

            1. The team involved in crashgate seems to be doing quite nicely – unless you consider that Renault may have sold them partially, at least, as a direct result of that whole thing. That, if true, would look EXACTLY like a scandal having a pretty direct impact on part of F1…

              1. Well yes… Renault sold up, but I think that had been on the cards for a couple of years. They may have gone quicker without crashgate. To quit at that point would not have looked good. As it was they made a commitment to FIA to stay involved in the sport. Whichever way you read that situation it’s one team. Cash is short right now – and that affects a lot of things, even F1. Sponsors and teams have contracts – so it’s possible that it may suit a sponsor to quit, but the contract forces them to stay involved. EG it would have suited RBS to not be seen squandering tax payer’s money on F1 racing, but a contract is a contract and they had to stay involved with Williams for the term of the contract. Contracts may get negotiated when times are good and then run on when times are bad.

  15. Not sure where this is heading but have to ask, what’s the point?

    It’s not public money, if CVC paid too much, that’s their problem.

    The idea that you then chase somebody for this with the prospect of locking them up seems laughable when you consider that the banks seem to perform far more brazen fraud and robbery and yet none of them have been even hinted at being charged with anything…

    (I’m not a Berni fan per say, just trying to put some perspective on this.)

    1. But didn’t the German bank have money belonging to hard-working German taxpayers? And just because the banking system could be full of thieves doesn’t make it right. How ’bout we start HAMMERING white collar criminals with decades of prison time, the same way we do “blue collar” crime. I’ve been waiting for this since the 1960’s but we all know who pays off the politicians to write the laws. Justice has been for $ale since forever!

    2. It might not be ‘puplic money’ in the sense that it money from the puplic purse, but the money has to come from somewhere. It flows through F1 from TV deals, sponsorship, advertising- where does that come from? The PUBLIC! It adds on 10p to the price of Shell fuel over the year, £1000 to the price of a new Ferrari, 1p the price of a can of Red Bull £10 per month to SKY. This money does not come from nowhere, but from the Fans in the long run. (figures not accurate, made up for illustrative purposes)
      So it is our problem.
      When the money is hidden away in illegal trust funds then that is also our problem. We then have to pay addional taxes to make up the short fall. If it is billlions in unpaid UK tax then that represents £100’s pounds per tax payer. Would you let Bernie walk into your house and just take £100 out of your wallet?

      1. Great point. Very roughly, £1bn of unpaid tax = £20 per taxpayer, so yeah, that figure’s not far off…

    3. The Bank Gribkowsky worked for is, at least in part, owned by the state. It owned F1 as part of a debt Leo Kirch, the formwr owner couldn’t pay back. CVC didn’t pay too much, it payed to little, meaning the Bank could have made more off of the sale, which means it didn’t get as much money back from Leo Kirchs original debt as it could have. Gribkowsky , together with Ecclestone, is therefore responsible for the loss of taxpayers money, which, in my.opinion prompted.the harsh jail sentance. This would also be a reason for.the German state to try and persecute Bernie, but i’m not so sure this will happen. On the one hand, the German justice system has a habit of.letting important (rich) business.people go unpunished in this type of scandal (go.and read up on the vodafone deal to see what i mean) and on the other hand they already have a culprit in Gribkowsky and it is not as if the whole thing had produced major headlines in Germany.

  16. there’s probably a fair degree of reluctance to prosecute an 81 yr old high profile Brit

    1 a degree of compassion due to age
    2 taking down a highly accomplished iconic motorsport figurehead respected worldwide
    3 The prosecutors will know he will through everything at them including “multiple kitchen sinks” legally – so unlikely they could successfully prosecute

  17. It’s all such a very long way from when people scraped together a bit of cash, and an engine and a chassis, and went to some tracks to see how fast they could go. Then it was for fun; now it’s just about the money – and it beggars belief that ‘society’ could allow the promoters of a series in which, basically, 24 cars go round and round in circles, to become such an amoral cash generator for a very privileged few.

    The Times has recently made a big issue of a B-list comedian, Jimmy Carr, hanging on to the odd million via a tax-avoidance scheme – perfectly legally, but (according to our PM) “immorally”. Well, at least that was money earned from his personal efforts. I see no matching interest from The Times to investigate the tortuous tax affairs of CVC, Bernie and Slavica Ecclestone and the beneficiaries of the Bambino Trust. I’m sure their tax situation would make Jimmy Carr and his ilk look like Tiny Tim!

    1. Calling Jimmy Carr a ‘B list comedian’ is rather inaccurate. He has sold out pretty much every theatre in the land, (i’ve seen him at the hammersmith apollo at least once if not twice, 2000 seats at £40 a pop), he does numerous TV comedy shows and has had several dvd’s of his shows. He must have made a good few million, if not tens of.

  18. p.s

    4. Bernie’s Lawyers are probably already proving most helpful behind the scenes giving the German prosecutors a ‘sniff’ of what they will come up against, that will probably ‘help’ them decide whether to prosecute or not. The British tax authorities on the other hand may be sharpening their pencils.

  19. Joe,

    I don’t get it. So if Gribkowsky is jailed for accepting bribes, when surely, due to the nature of bribe, the briber is surely more convict-able (i’m not sure if that’s even a word, but you know what I mean) than the one accepting them? As the state prosecutor says Bernard was “…accomplice in an act of bribery.” Does this mean that he will be arrested and tried or have I misunderstood the situation?

    PNJ

    1. And I see this morning the “London GP” is getting the FULL media coverage as opposed to the local coverage from last week. Burying bad news as Jo Moore once said…?

    2. To convict Bernie, or anybody else, you would have to lay a charge, bring the matter to trial and then provide evidence and allow the defence to put that evidence to the test.

  20. Did the court FIND that Bernie offered a bribe? Gribkowsly decided to plead guilty, which is not the same as the court proving the matter. Possibly he’d get off lighter pleading guilty to bribery than hanging on and getting found guilty of extortion.

  21. Quite how HMRC can fail to go after Ecclestone for back taxes is beyond me. In the current climate (tax avoidance was on the front page of The Times nearly every day last week and more is brewing) they would love a big high profile scalp. The idea of the Trustees acting other than in accordance with Bernie’s wishes is unthinkable. If he has had any control or influence whatsoever over Bambino it makes it a UK resident trust (I’m assuming Bernie is UK tax resident). Bang. Income tax, capital gains tax and inheritance tax going back what, 30 years? Expensive.

    1. I suppose it is possible that the guys who DO control the trust (presumably a legal firm) decided that it was the lesser of two evils to pay a bung to Gribkowsky. Bernie’s version of events all along is that the lawyers told him that paying the money was the easiest path to take.

      One problem with this though is that extortioners typically do not give you a guarantee that it won’t happen again.

      1. A man called Stephen Mullens refused to give testimony in the court in Germany late last year, apparently on the grounds that he did not wish to incriminate himself. He had previously resigned from his various positions in the Formula One group of companies. The trustee of the Bambino organisation is Luc Argand, a Swiss lawyer, who has been involved in Formula 1′s legal dealings since the 1970s. The Bambino Trust has been under the scrutiny of the Bavarian public prosecutor in recent months because of the Gribkowsky Affair. There have been reports in the German media that a number of lawyers – three in Geneva and one in London – are being treated as suspects, and the Swiss police have reportedly raided offices in Switzerland.

        1. Ah! The plot thickens. I think it possible that something may stick to Bernie and Bambino as a result of these investigations and the Gribkowsky verdict, but not to CVC. And will anything stick to F1?

  22. Banker gets jailed 27th June 2012, London GP touted 28th June 2012, any chance deflection tactics in full swing????

  23. One presumes that the London GP idea BE has just floated is a (probably vain) attempt to distract attention.

      1. It’s what everybody does these days esp the G.Ment of the day. Why wait for bad news to spread. Makes no sense.

  24. I have to say I am more interested in an earlier transaction, which kicked off the process that led us to this sordid affair. How much was the then-President of the FIA paid not to “tell fibs” to the Federation about the value of the commercial rights when these were sold off? Whatever the arrangement was, I seem to remember it justified a move from the UK to Monaco.

  25. I’ve read a rumor somewhere that says that Mercedes will pull out the sport if the Gribkowsky is found to be guilty and the German prosecution decides to investigate Ecclestone. The main reason is that Mercedes has a rule that says that any partner that is incriminated with something should be cut off as a partner.

    Is there any truth to this rumor? (it would certainly be a major blow to the sport if this happens and it would mean that a lot of things planned for the moment would be put on hold indefinitely (like F1 selling shares on the Singapore stock exchange))

    1. I very much doubt that Mercedes-Benz would do that. I would imagine that if that possibility existed then the investors in the Formula One group would ask for a change of management rather than losing the folk from Stuttgart. Perhaps this is why these rumours are circulating.

      1. Thank you for your view on this. I probably would have found it strange if a company like Mercedes, who has invested so much into F1, could leave just like that. But the reason given sounded as a valid reason so to me it was a plausible explanation but that was before I heard about the possibility that Mercedes could ask FOM (is it FOM…?) for a change of management.

        This is the why this site/blog is different from all the other F1 reporting sites and why I like coming here. I can actually ask the author things and I get a serious answer. Thanks again

      2. I have always found it curious that Mercedes chose to return to F1 after 50-odd years absence at the exact moment that BMW chose to leave. It would be surprising if BMW had no connection with Bayern LB . . . I wonder if they had some inkling that this storm was about to blow up?

  26. He’s admitted taking a bribe, but has he said what he was bribed to do?

    He’s in prison for the tax evasion on the bribe and being corrupt and accepting a bribe, but I haven’t seen any information on what it was that he was being asked to do that required a bribe of that size.

      1. Joe – a cynic would suggest that some clever lawyers structured an outcome from the trial. The prosecutors could save face, Grib pleads guilty on a technicality and gets a big headline penalty, but serves a few soft years on a penal farm then gets out on early release, and BE is protected somehow by the technicality of the ruling (ie not legally providing a bribe).

  27. Mercedes spearheads a move to regroup FOTA into a cohesive body in order to attempt to wrest control of the commercial rights from the current owners thereby saving the sport from dissolution and allowing Daimler to maintain its moral high ground.

    Is the above a potential scenario or absolute crap?
    I am simply an F1 fan, not an expert.

  28. I don’t know what you’re talking about Joe.

    Christian Sylt says that it is inconceivable that Gribkowsky was paid a bribe, so I have no idea on what basis the German court have convicted him.

    You’re not seriously suggesting that the inestimable Pitpass were talking out of their derriere are you?

    1. Please give them some respect. They don’t just talk out of their derrieres, they trumpet with all the confidence of Tommy Dorsey. It is the ultimate irony that pitpass.com does not have a pit pass, let alone a paddock one. Still, they are not about to eat Humble Pie over the fact that Sylt’s defence of his occasional lunch partner proved to be so ineffective. I guess the German courts are not reading his stuff. Amazing.

  29. Joe,

    Shouldn’t Bernie be investigated by the FIA for bringing the sport into disrepute?

    Did they finally institute the idea of issuing licenses to F1 personnel in order to be able to effectively ban people like Briatore after harming the sport? and if so, wouldn’t this be a textbook instance for the use of such a rule?

  30. Sylt/Pitpass also maintain that the shares were not undervalued. The rationale is that there was no other, higher bidder. However, the bank was not forced to sell at that time. The timing and the buyer was only opportune for Ecclestone. The shares the bank held were originally bought by Kirch for 2.7 billion but were sold on by Gribkowsky for around 850m. Which does seem a huge markdown. Today they would be worth six times that amount.

    1. You choose to read what you read. Sylt is not an F1 journalist. He writes about F1 but from the outside. Bernie uses him.

      1. So yet another who has been bought by sweet talking and inducements which are headlines in this context. If it is a conflict of interest it is risible! We see in the Times that a comment from the pope can turn a silly story into front page news.

        I do not think that the shares are now worth six times 850m because there is no Concorde Agreement. When Gribkowsky sold the shares the Agreement was valid for two years but now it is only one. With every day the value of the shares should decrease so I imagine that the American investment houses are on the edge of their seat. Why did they not wait to buy F1?

        1. Tom wrote:

          I do not think that the shares are now worth six times 850m because there is no Concorde Agreement.

          True, valuations are always notional until actual money changes hands. But even without an agreement, three investors put the value of F1 at 9 billion.

          Here’s a German article (25 04 12) which discusses that point.

          http://www.merkur-online.de/nachrichten/wirtschaft/formel-milliarden-karussell-dreht-sich-2330620.html

          Since the German judge did not incline to the views of Ecclestone or Pitpass, the bribe conviction becomes quite significant to those cases which have been waiting on the outcome of the trial – such as Constance Medien’s. I believe Bayern itself has litigation awaiting from trustees of the Kirch estate. Lehman might join the queue.

          1. I have used the translation of the article and I do not see that the conviction is useful for Constantin Medien because the judge does not say that the value of F1 was below. All the reports now drop the talk about undervaluation (for convenience?) and the Financial Times writes today that the judge admits that the sale to CVC was good business for the bank. The price is only real when there is a change of money so your belief is not more right or wrong than mine.

            1. Tom wrote:

              All the reports now drop the talk about undervaluation (for convenience?) and the Financial Times writes today that the judge admits that the sale to CVC was good business for the bank.

              That’s the really confusing part, isn’t it. Tom? Or it certainly baffles me. Yes, it is even written in the Bank’s annual report that the sale ‘contributed greatly to their results’. So where is the rationale for the bribe? And why on earth did the bank bring the undervaluation charge in the first place? Or pillory a guy who got them a (so they now want to say) good deal?

              That same article notes that Bayern held an internal investigation into the valuation but ‘chose not to make the results pubiic’.

              The bank of course bears corporate responsibility for its employees. So in a way, by convicting Grib, it has confirmed its own liability.

              Really strange. It’s not over yet.

  31. Wouldn’t Gribkowsky been better off reporting Ecclestone for trying to bribe him? Bernie gets investigated, more than likely gets sacked from the position of F1 boss, we get someone decent in, bringing F1 back to as it was with more European tracks, and Bernie spends the rest of his pitiful life in jail.

    Win-win for everyone I think

    1. Ah, hindsight as always. Wouldn’t it also have been better for Bernie to have supported Gribkowsky’s claim of ‘consultancy fees’ in the first place. Even a year ago, Der Spiegel noted that such a sum – though perhaps shocking to German readers of Bild – was ‘peanuts’ to Bernie. And BE did need the help of a clever, former adversary at the time of the threatened FOTA breakaway. That would have sounded a lot more credible to the judge than two diametrically opposed testimonies.

      (Even if they just kinda made it up))

      1. Hey, copydude, am I allowed to say I totally rate your blog? Awesome! My Uncle did quite a bit of travelling behind the curtain in the 50s (n-power treaties etc., minders always lurking in every “family” shot..) and the Wall fell just as I was getting into business. Particularly loved your mono shot of a 600 SE 6.3 under “Victory Car” ~ was offered a mint one by Nigel Cooper, white, Concourse, had to turn it down, account would have been sacrilege for a London runabout! Sorry for the love in, everyone else . .

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