A damages claim filed by media company Constantin Medien against Bernie Ecclestone was rejected this (Thursday) morning, but a UK High Court judge did say that the Formula One Group chief executive paid a bribe amid the sale of the motor-racing business in 2005.
In his approved judgement at the High Court in London today, Mr Justice Newey said there had been a “corrupt” deal with a German banker to aid F1’s sale to a preferred buyer. However, he added that it could not be demonstrated that Constantin suffered a financial loss resulting from the arrangement, adding that this fact proved “fatal” to the German company’s claim.
Constantin Medien was seeking damages over the agreement that made private equity group CVC Capital Partners F1’s main shareholder. Constantin was seeking about $140m (€102.2m) in compensation over claims that Ecclestone and three other defendants – the F1 chief’s former lawyer Stephen Mullens, the Ecclestone family's Bambino Holdings and Gerhard Gribkowsky – deliberately undervalued Formula One when CVC bought into the business in 2005.
Gribkowsky, former chief risk officer at BayernLB (BLB), has already been jailed for more than eight years for tax evasion and bribery after taking a $44m payment from Ecclestone as part of the deal. BayernLB was one of the banks left in control of Formula One after the collapse of German businessman Leo Kirch’s media empire, which owned the rights to the sport. BayernLB sold a 47-per-cent stake to CVC for about $830m in 2005.
Whilst giving evidence in the Constantin case in the High Court in November, Ecclestone said he paid Gribkowsky £10m (€11.8m/$16m) as an “insurance policy” because the German banker was threatening to make damaging claims about his tax affairs to British authorities. Ecclestone maintained that the payment had no connection to the CVC deal.
Writing in his conclusions to the case, 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 added: “It was no part of Mr Ecclestone’s purpose (or Mr Mullens’) for BLB’s shares to be sold at an undervalue, and neither Mr Ecclestone nor Mr Mullens had any desire for the shares to be sold at an undervalue or believed the price at which they were in fact sold to be below market value. No loss to Constantin has been shown to have been caused by the corrupt arrangement with Dr Gribkowsky. That fact is fatal to the claim as against all the defendants.”
Following the ruling, Constantin said that it would continue to pursue its claim by lodging an appeal. The company said: “The court viewed as a proven fact that Ecclestone bribed Gerhard Gribkowsky… for the purpose of selling Formula One to an owner preferred by him. The court also deemed as proven that Ecclestone was aware of the danger that the sale was conducted below value. Constantin Medien AG further assumes that the company is entitled to claims based on the findings of the Regional Court in Munich regarding the criminal proceedings against Gerhard Gribkowsky and today’s ruling of the High Court in London. Constantin Medien will further pursue its claims and appeal.”
The Munich state court confirmed last month that Ecclestone would face charges over payments to Gribkowsky when the series was sold to CVC. Ecclestone faces charges of bribery and incitement to breach of trust connected with the $44m payment to Gribkowsky. A provisional April 23 date has been set for Ecclestone’s trial in Germany.
Source: SportBusiness
