Bernie Ecclestone has won a High Court battle against German media company Constantin Medien. This does NOT mean that he is in the clear in Germany as some have suggested but rather that the judge did not believe the claimants had proved that Ecclestone undervalued the F1 shares in order to get control of the Formula One group, which he had lost after the collapse of the Kirch empire.
Mr Justice Newey said: “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 the Formula One group to a buyer acceptable to Mr Ecclestone.”
He also said that: “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.”
What the decision will do is discourage other opportunistic attempts to make money. The court case in Germany relates primarily not to the price of the sale, but rather whether a bribe was paid to a public official by Ecclestone and by a family trust fund called Bambino. That has implications in that the fund was supposed to be operating outside Ecclestone’s control and thus the trustee will probably need to explain at some point why it was deemed sensible to pay money to state bank employee Gerhard Gribkowsky, who is serving eight and a half years for accepting a bribe. If there is a suggestion that Ecclestone was involved in that decision, it is likely that the British tax authorities will get involved as they stand to gain billions in taxes if the trust was being operated in an inappropriate manner.
joeblogsf1 
You’re right, he’s very much NOT in the clear!
According to the BBC report “Mr Justice Newey, in the High Court in London, said there had been a “corrupt” deal with a German banker to facilitate the sale to a preferred buyer.”
How can Ecclestone survive as a company director after such a damning statement?
Indeed. The New York Times does not declare this a “victory” for BE. On the contrary, they say: “Judge Calls Ecclestone Deal ‘Corrupt’”
I understand the German authorities can use this judgement as evidence in their proceedings, which on the face of it looks extremely problematic for BE.
I would not be surprised to see a story appearing soon reporting that Ecclestone has settled with both the German court (as is legally possible in Germany), and HMRC, and is retiring to a quiet life in the sun shorn of his billions.
On the other hand, it would be foolish to underestimate a billionaire of Bernie’s tenacity and influence.
If the quote I’ve read that the judge found it “impossible to regard him [Ecclestone] as a reliable or truthful witness” is correct that’s not exactly helping him with forthcoming events. If the judge saying it was a bribe doesn’t do for him in the first place…
Not overly surprised, wonder if Bayern will back off now.
The judge also said that he found it impossible to rely on Ecclestone as a “reliable” or “truthful” witness and that ,The payments were a bribe. They were made because Mr Ecclestone had entered into a corrupt agreement with Dr Gribkowsky
Now that could be interesting
The case failed because the claimant couldn’t demonstrate that they suffered a financial loss. They couldn’t demonstrate causality. They were essentially trying it on.
Given the “bribe” was paid to a BayernLB employee, and the shares were BayernLB assets, I’m sure BayernLB would have a stronger case.
“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.”
Even though Bernie has avoided this particular bullet, this statement in itself is not going to do any favours to his reputation.
This is not a new event for Formula 1. When leading figures in the sport enter court as defendants or plaintiffs, they often find themselves on the wrong end of stinging rebukes from judges. I seem to recall that Eddie Jordan was similarly excoriated in court in the UK a few years ago when Jordan Grand Prix tried to sue Vodafone over a sponsorship contract dispute. Further back, Colin Chapman and his financial team ran a distinctly opaque set of processes (and Chapman ended up mixed up in the “DeLorean missing money” scandal, which indirectly led to at least one ex-Lotus person doing jail time). The operating models and business dealing processes of F1 and its teams often do not show up well under detail legal scrutiny.
IIRC, both of those rulings were widely publicised, and both IMO did -very- severe reputational damage to the gentlemen in question.
That’s very true. I wonder if it is because in modern ( post 1978 F1 ) it seems to be that lies and obfuscation are the main tools of what Ron Dennis memorably called The Pirhana Club. I worked once, in a business that had two Managing Directors. These two gentlemen could be relied upon, never to tell the truth over anything. However, without being too hard on them, over time, and upon reflection of past events, I think the actual problem was that they convinced themselves, that what they were purporting to be the truth, was the truth, even when it so obviously wasn’t! The lied to themselves so much, that the believed their own lies totally, a sort of self fulfilling prophesy. I wonder whether this is not the problem at the heart of spin and falsehoods amongst the prime movers in F1. This maybe why when judged by authority in such civil proceedings as you mentioned, it is the case very often that these guys are not accepted as being truthful, by Judges.
Although Mr Justice Newey’s finding that it was a bribe looks bad for BE’s chances in Germany, in a civil case like this, the judge has only to decide on the balance of probabilities. In the German case, he will have to be found guilty of bribery beyond all reasonable doubt, which is a different issue.
I’m not saying he won’t be, but a lot of people get off although the jury was 90% certain of their guilt. 90% certainty isn’t enough in a criminal case, even though it is far more than enough to decide a civil case.
Not so. You would be correct were the criminal case to be tried in this county but there is no similar system or standard of proof in Germany. Indeed the concept is meaningless within the context of the inquisitorial legal system they operate.
Aaahhh!! So Mr Justice Newey’s finding is really bad for Bernie then, if the German verdict will similarly be based on judges’ opinion rather than proof. Strange that the papers etc are reporting it as a victory for him – pyrrhic at best, it would seem.
This decision is a disaster for Ecclestone. I cannot understand why some commentators think it helps him in relation to the case in Germany. Here is a judgment which seems to hold that the essential facts of the prosecution case in Germany are true. I expect there will be an appeal by Median but that will focus on.the question of their loss. It was the fact that the Judge held that they had not suffered a loss which, it seems, was the reason for dismissing the claim.
I think Bernie can get off the German issue if there isn’t any evidence that he was able to manipulate the Trustee/Trustees to make a payment as a bribe. If the Trustee/Trustees decided that it would be more costly to defend their Tax position from an unwelcome inspection by HMRC, than it would be to pay off Gribowsky, then as long as they could justifiably claim that the Tax affairs are all legal, it is then just their decision what they did with the good Doctor and his shakedown ( if that was what it was! ), and the fact that it might look an unusual decision is, in law, neither here nor there. Trustees have a wide range of powers, but must not be influenced by Beneficiaries of Trusts in making any decisions about a Trust, or its assets. I think it is a very complex case and that Bernie can wriggle out if there are no smoking guns around….however with regard to his position at the head of F1 and with his commercial bosses, the comments Judge Newey ( there’s a coincidence eh! ) made about Bernie’s veracity, would seem to be a bigger problem especially when he is dealing with all sorts of high ranking political and business figures.
I am sure the German judge will read your views with interest.
I have a small amount of inside knowledge on the subject, as a Trustee for a family trust, not on the Bambino scale I hasten to add! Also, this Trust had a difficult situation some years ago, when another Trustee tried to manipulate the Trust for their own ends. That person has long departed in every sense of the word, but the whole 5 year legal process, gave me an insight into what Trustees can and cannot do, and equally, what Beneficiaries are capable or not capable, of asking from a Trustee.It was very fraught, but interesting, especially in so far as the interplay of money and beneficiaries desires are not as simple as the beneficiaries think.
Out of interest, does the FIA have any kind of “fit and proper persons” rule that they could use to have Bernie removed from the sport if they wanted? Or as in CVC are made to make Bernie stand down or the 100 yr rights revert back to them?
They do. But will they do anything about it? Different question.
Well, Gribkowsky is not in jail anymore. He is working as a consultant at the austrian “Strabag” company. Since October 2013. Technically he is not out on probation, he has to spend some evenings in a low security house, but not in jail. Some say: that was quick, he just spended 1 year in jail, but was sentenced to 8.5 years.
I had not heard that. Seems strange.
Extremely strange. But we have seen before that money can solve sooo much things. Escpecially that amount of money involved in this very case…
I would be happy just with a single (1) percent of it. Or two (2)…
Am I cheap? YES! And feels great! 😀
Joe, he’s been out of jail since October.
The F1 press hasn’t reported on it, but there were a number of stories about Gribkowsky’s release in the German media.
And yes, it is odd that he’s served less than a third of his sentence. Though hardly surprising that no one in the F1 press seems to have know about it, let alone begun to wonder why.
My guess is that this will end up having rather a lot of relevance to F1. More than 95% of F1 news items.
Links below:
http://www.sueddeutsche.de/wirtschaft/ehemaliger-bayernlb-vorstand-gribkowsky-darf-vorzeitig-aus-dem-gefaengnis-1.1797133
http://derstandard.at/1381368919453/Ex-Banker-Gribkowsky-hat-neuen-Job-bei-Strabag
Laughing at search result placings. On Bing the third result is a lovely little Q&A from 2005 on the Formula1 website.
http://www.formula1.com/news/interviews/2005/10/3782.html
Obviously Bernie getting “confused” with the revolving door at the Court didn’t fool Justice Newey!
I don’t supose the judge is any relation to Adrian Newey? Wouldn’t that be a laugh!! “So, you want your brother to win another constructors title do you???”
Joe to the rescue again. Heard the news on the car radio a while ago and my first though was; ah!….he’s ok; in the clear…….It would seem very much NOT… Thanks for the clarification.
Gribkowsky has been convicted of receiving a bribe, the judge has commented that a bribe was paid, and German courts will reviewing the case soon.
If the sale was corrupted by bribery, wouldn’t the other bidder have a claim to lost revenues or to have the sale overturned as it was improper.
I realize this is a simplistic point on a complex case but I’m curious nevertheless.
This ruling may stave off Bluewaters, from an attack in the UK
However one has to wonder why Bambino was used to pay part of the monies to Grikowski; when ostensibly it was paid in order to avoid disclosure of an inferred control by Bernie, fairly obviously shooting itself in the foot. Unless of course the other trustees of Bambino can come up with a believable reason to pay Gribkowski coinciding with the other payment in timing and destination. Maybe Bernie thought the islands he picked were sufficiently distant for transactions to be untraceable.
Is the full text of the verdict posted online? I cannot find a copy. The Guardian had reported that the court found “the money [paid to G] was a ‘bribe’ and that there had been a ‘corrupt agreement’ with Dr Gribkowsky in 2005.” Criminal standards of proof tend to be higher than in civil actions, but those comments – if correctly recited – do not bode well (although they are entirely irrelevant to a German court).
Here is a link to the judgement http://www.bailii.org/ew/cases/EWHC/Ch/2014/387.html , hopefully this does not offend against the rule of links promoting others websites. Cheers
Thanks for the link to the full judgment. I can’t claim to have read it thoroughly, but it leaves me with a sense that the commercial operations of F1 are being led by a clique of sharks obsessed with their own enrichment. But then that’s no surprise!
Mr Justice Newey makes clear which witnesses he favours (Mackenzie of CVC and Miss Flournoy of Bambino) and those he distrusts (Ecclestone and Mullens). In his conclusions he catalogues why he disregards much of Ecclestone’s evidence. What caught my eye is that it was Ecclestone’s own lawyer that advanced the theory that Ecclestone’s age might excuse his lapses in memory (the “Saunders Defence”) – hardly something which strengthens Ecclestone’s claims to retain his position as a senior executive.
But I still don’t understand why the Bambino trustees paid half the “bribe” – the judge presents the evidence that they did, but I didn’t register anything he wrote as being a viable explanation. Does the judge believe that Ecclestone does control Bambino and leaves the reader to draw their own conclusions?
If Bernie controlled Bambino, he would be in an impossible position, as Bambino is a Trust, he should have no say in how it is run, unless he is a Trustee. If he is a Trustee, he would not have any controlling say in how it runs, as this would require all the Trustees to agree on a decision, or a Majority of them to agree, depending on how the Trust is set up.
Err, have you forgotten the original purpose of the Bambino Trust? As I understand it, Bambino was established for the benefit of Ecclestone’s wife and daughters so that the Bambino income would not be taxed by HMRC as if it were Ecclestone’s. To meet HMRC requirements, it must be demonstrable that Ecclestone has no control over Bambino and its assets; there can be no question of Ecclestone being a trustee/director of the trust. Mr Justice Newey’s judgment does reveal who are and have been the official directors of Bambino; I wonder if his distrust of Ecclestone and Mullens and the way in which he links them together, is indicative of a suspicion that it is through Mullen’s role in Bambino that Ecclestone has influence. Or is that just “guilt by association”?
It depends on the type of Trust. I am a Trustee of two family Trusts, I can also be a Beneficiary. The Trusts are Discretionary. In that case, the Trustee could say give me money, if they decided to. But as a Beneficiary I can’t demand money, nor can I say that a certain % of the Trust assets are mine. The reason being, again, that it is entirely upto the Trustees as to whom they make provisions for. So, it depends what the Trust rules were when it was set up, and also how it applies the STEP provisions for Trusts. It is a very complicated subject……
Surely if Gribkowsky was convicted of accepting a bribe, somebody must have paid that bribe. I believe that Gribkowsky admitted accepting the bride, therefore by implication that somebody must also be guilty. you can’t have the bribed guilty and the briber innocent. Or is this over simplistic.
that has been the mainstay of my understanding of this entire saga and duplicates what i have posted on various sites in the past. anything else defies logic.
‘The judge’s finding that Mr Ecclestone had paid a bribe was, it added, “not underpinned by reliable evidence” because the source of the allegation – Gribkowsky – had not given evidence in the case.
“As such, the judge’s opinion is expressed in the light of hearing only partial evidence that has not been properly tested,” the statement said.’
Err, Bernie. You don’t get to dismiss the judge’s findings like that. It’s on the record now. You can’t ignore it or pretend it hasn’t happened. This case will be of tremendous interest to the German authorities and you don’t get to tell the judge he was wrong. The record will forever show that you bribed someone. To say otherwise is simply solipsism.
Wondering if this kind of business ethic / politics is present only in F1 or if other major sports are the same.
Hmm, the BBC, other media, and even here, it’s said Eclestone WON.
He did NOT WIN anything.
The other party simply failed to prove they lost money, so noting to pay, but they will appeal. OK, problem deferred, but that’s all….
Meanwhile, the judges comments, while not a legal judgement, cast serious doubts on Mr E’s credibility and do not bode well for his next trial in Germany..!
Regards,
Martin
He won a victory over Constantin but was whipped the judge.
somewhere there is another question and that is, how much did CVC know about the deal and the bribe? were they a party to it by way of saying of BE, do what is necessary to get it over the line. would they,CVC, then be complicit? what would be the motive for BE to do the deal then? retention of his position?