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F1, Bribes and Bankers

Posted by BarnabyButton on July 18, 2012 | No Comments

Ex-BayernLB Banker Gerhard Gribkowsky was jailed for over eight years recently for taking £23 million from Bernie Ecclestone.

Bernie said to the Presiding judge Peter Noll that he had paid Gribkowsky to try and avoid a very costly tax investigation.

He denied that the money was a bribe, and said he is expecting to be cleared of doing anything wrong.

Mr Ecclestone said that he was worried that, if he hadn’t paid Gribkowsky the money, then he would have informed the HMRC tax inspectorate of “things” that could have led to a tax investigation, which, he said, “would have been very expensive for me.”

“The tax risk would have exceeded £2bn…I paid [Gribkowsky £23 million] to keep calm and not to do silly things.”

The judge described Bernie as the “driving force” behind the payments.

The former BayernLB banker received a reduced sentence because he admitted to all the corruption charges. He was convicted on charges of tax evasion, bribery, and breach of fiduciary trust.

The corruption charges relate to the sale of the F1 business in 2006 to private equity firm; CVC Capital Partners.

Formula One was owned previously by Bernie’s family trusts and a group of investment bankers before CVC Capital Partners acquired the overall controlling share.

While working for BayernLB Bank which owned 48% of Formula One, Gribkowsky was in charge of managing the sale of the F1 business to CVC Capital Partners.

Mr Ecclestone said, in reaction to Gribkowsky’s sentence: “I think Mr Gribkowsky told them what he thought he had to tell them. I don’t think I should [face a criminal investigation] but you don’t know, do you?”

Source: Monaco Grand Prix VIP

Keep Calm and Carry On

Image Source: Monaco Grand Prix VIP

We certainly don’t know, but it seems that Bernie has a Teflon coating and is probably sleeping easy in his bed.

Whether you love him or loathe him, Bernie Ecclestone has done a lot for F1 over the many years of his helmsmanship. But, as time has gone on and the proceeds of the race action have gone from tens of millions to hundreds and now billions, the greediness and corruption have seeped in to the sport itself.

Does Bernie deserve to be rich from all his hard work? Yes, of course. The really pertinent question as far as F1 is concerned is whether the corruption is more to do with the bank or with Bernie. Now this is the really difficult question. We all know that banks and the whole banking system is rotten to the core, but Bernie? If you could save £800 million (40% tax on £2 billion) with a payment of £23 million hush money, it is a very tempting offer. Even Alan Titchmarsh could be corrupted with that kind of money.

F1 needs a character like Bernie at the top (IMHO) but it also needs the flow of money to be more balanced. At the moment all the owners are pulling money out and not putting much back in. If this continues then F1 will become a lot rougher round the edges. This though, seems unlikely as the F1 star shines very brightly and advertisers are still queuing up to have their logos plastered all over the Drivers and their machines.

Tracks are still making money even with advertising revenue being siphoned away, and most race goers are unworried about court cases in the foreign media. A court case like this is just a fly in the ointment to the Bernie Behemoth and F1 is left untainted in the public imagination.

Bio
Barnaby Button works for ExclusiveGP organising Grand Prix Tours and Hospitality for the Monaco Grand Prix and every other Grand Prix around the world.

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