Ecclestone paid ‘bribes’ to F1 team bosses? (2nd Update)
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The vast majority of Sylt's newspaper reports are exclusive news which has never before been reported such as the reduction in the damages claim. In contrast, sports reporters for several papers and news wires are doing conventional court reporting on the events disclosed in court even though it is perhaps not what they would usually cover.
The challenge for them is the complexity of the material and how to make it relevant to their readers. The latter point is the toughest nut to crack given that the details of the case tend to cover events which are six or seven years old rather than say the results of a race or a match which took place earlier in the day. It means that the sports reporters are likely to latch on to anything sports-related which comes up in the court hearings. This brings us to the news which came to light over the past few days.
The news concerns payments made to several teams way back in 2001. The offer to the teams was made even further back than that in February 1998. At that time, an Initial Public Offering (IPO) of shares in F1 was being planned and in order to ensure that the stock market flotation raised as much money as possible, all of the teams needed to be signed up to a Concorde Agreement – a long-term contract to remain in the sport. As Bambino's QC Mark Hapgood explained in court on 1 November, "what happened was that the teams were given an option of receiving either some shares in the IPO or $10 million in cash. In the event, four of the teams opted to receive $10 million in cash."
Mr. Hapgood pointed out that if the teams had not been paid, regardless of whether there had been a stock market listing of F1, they could have sued F1's parent company SLEC for damages. "A claim in contract would have failed because the condition precedent, namely the listing, had not taken place. But a claim in damages would have had very good prospects." He explained that the reason for this is that "if you say to someone 'if you confer a benefit on me I will do something for you', if you create that legitimate expectation, you cannot, yourself, as offeror, frustrate the expectation which you've created." In summary, the teams which accepted the $10m payment needed to receive it.
In 2001 the teams asked for the money and it was paid, "partly because there was force in that point, and partly in the interests of good relations," according to Mr. Hapgood. On Thursday it came out in Ecclestone's testimony that the four teams were Arrows, Jordan, Prost and Williams. They may be blasts from the past but the names were familiar territory for the sports reporters.
What's more, it was revealed in court that the money was not paid to the companies which ran the teams but to the owners. Constantin's QC Philip Marshall described this as "a very odd thing to be doing" but Ecclestone responded that the owners probably asked for the money so they could pay it into their companies.
It gave the sports reporters something to latch on to and the concept involved is not a tricky one – team owners were paid in return for agreeing to sign the 1998 Concorde Agreement. The concept may not be tricky but it still requires a good working knowledge of the fiendishly-complex F1 company structure in order to report it accurately.
Many of the articles which popped up about the team payments described them as bribes and claimed that the money was paid by Ecclestone. The headline of one of these articles even managed to get both allegations into it – 'Bernie Ecclestone trial: Formula One supremo paid £6m 'bribes' to former owners to sign Concorde Agreement'
This came as a surprise here at Pitpass as we remember stressing in our report that the money came "from Valper Holdings, a subsidiary of Bambino Holdings, the Ecclestone's family trust."
Sylt confirmed that this is indeed the case and even put up a link to a verbatim transcript of the relevant exchange from the court hearing on the Twitter page of his F1 trade guide Formula Money. The transcript reveals that Mr. Marshall clearly states "we have a document seeming to record the issue of a check by Valper Holdings." It also shows that Mr. Marshall, who, don't forget, is representing Constantin, doesn't even refer to the payments as 'bribes'. Instead he claims that paying the money to the team owners was "very odd" and "a very strange arrangement."
To be clear, we aren't talking about a technicality here. Ecclestone is not a beneficiary or a trustee of Bambino or Valper. It means that he is legally completely separate to the trust and he stresses that he has got no control over it. Way back in 2011 Ecclestone revealed to Sylt that the reason he paid Gribkowsky was to stop him from making false claims to the UK tax authorities that he was in control of Bambino so it shows you how seriously he treats this allegation. There is good reason for his attitude.
Bambino is based offshore but Ecclestone is a UK resident so he would be liable to pay tax on the estimated £2.5bn ($4bn) in the trust if he was found to be in control of it. He says he paid Gribkowsky because his false allegations would have triggered a lengthy and costly investigation.
The upshot for writers and editors is that the devil (or perhaps an angry billionaire) is in the detail. If Ecclestone wins the case then it would make it even harder to justify having written claims about him paying bribes to teams when the money did not even come from him.
That said, the business of F1 is so complex that even Constantin's QC can't always get his facts straight about the companies and one imagines that he is on a very big salary indeed. This is revealed in another section of the transcript, which Sylt recently put on his Formula Money Twitter page.
It outlines an episode where Mr. Marshall questions Ecclestone in detail about a decision he allegedly made on the board of a company only to be forced to concede at the end of the exchange that he was referring to Ecclestone's wife and not him. As they say, it can happen to the best of us. Full Story at Pitpass.com
11/08/13 On the second day of Ecclestone’s cross-examination, Philip Marshall QC, representing Constantin, sought to prove that Ecclestone was not a man averse to paying bribes by referring back to payments made to three former team owners in 2001.
Marshall said that Jordan, the team owner turned BBC pundit, four-time world champion Prost and the late Walkinshaw, who ran Arrows, all accepted bankers’ drafts from Valper Holdings, a subsidiary of Bambino Holdings, Ecclestone’s family trust.
“They were paid to ensure that their teams did sign. Isn’t that right?" Marshall asked. “Yes," Ecclestone said.
Asked why the payments had not been made to the teams themselves, and suggesting that they were in fact “very strange", Ecclestone said he had “not the slightest idea" what the three people named had done with the money. “I’ve no idea. They were paid to sign the Concorde Agreement and that’s what they did.
“What you’re inferring is these people haven’t been acting correctly, Alain Prost and whatever."
Marshall suggested that Ecclestone’s philosophy on such payments was consistent with that of Luc Argand, a Swiss lawyer and trustee of Bambino Holdings, who allegedly said that as long as the person paid was not a public official the payment itself was “not criminal".
“Do you regard the payment of bribes to people who are not public officials as acceptable?" Marshall asked Ecclestone. “I will have to think about that," Ecclestone answered.
Earlier in the day, Ecclestone laughed off suggestions that he intimidated Gribkowsky after it emerged that the former chief risk officer of BayernLB, a state-owned bank in Bavaria, felt so threatened by Formula One’s chief executive that he went to the police in Munich to register his concerns.
Referring to a statement Gribkowsky gave in December 2004, Marshall suggested the German appeared to feel he was “under some sort of physical threat" from Ecclestone.
Ecclestone laughed, saying that Gribkowsky had said that “what he really needed was a license to be able to carry a gun".
11/08/13 (GMM) Bernie Ecclestone's long reign at the top of formula one could end over an alleged multi-million 'bribe' paid to jailed German banker Gerhard Gribkowsky.
As the circumstances surrounding that payment are probed this week in London's high court, it emerged that more payments – which might also be described as 'bribes' – were paid by Ecclestone to well-known team bosses some years ago.
The court heard on Thursday that Eddie Jordan, now a BBC pundit, quadruple world champion Alain Prost, and the late Arrows boss Tom Walkinshaw – all former F1 team owners – were each paid $10 million to sign the 1998 Concorde Agreement.
The money was reportedly paid straight from Ecclestone's Bambino family trust into the bosses' personal bank accounts, not to their respective F1 teams.
"They were paid to ensure that their teams did sign. Isn't that right?" the lawyer for German media company Constantin asked the F1 chief executive in court.
"Yes," Ecclestone agreed.
It also emerged on Thursday that, although Ecclestone claims he only paid Gribkowsky because he was threatening to tip off British tax authorities, Gribkowsky in fact felt physically threatened by the now 83-year-old.
Constantin's lawyer said Gribkowsky felt he was "under some sort of physical threat" from Ecclestone and had even consulted with Munich police.
Meanwhile, in another case of F1's past being dredged up in 2013, former Ferrari team manager Nigel Stepney this week claimed the Italian team knowingly cheated in order to win the opening grand prix of 2007.
The Briton, who was a leading figure in that year's infamous 'spygate' scandal, told Racecar Engineering that the car driven to victory by Kimi Raikkonen had an illegal moveable floor.
"I like to try to win on a fair basis but when I was there I disagreed with something that was going on within Ferrari," revealed Stepney, who now runs the sports car team JRM Racing.