Formula One Mogul Bernie Ecclestone Charged With Bribery
German prosecutors accuse the racing billionaire of paying a banker $44 million to approve a $1.6 billion F1 share sale.
COLOGNE -- Public prosecutors in Munich have brought charges of bribery against Formula One mogul Bernie Ecclestone.
The charges are related to $44 million that Ecclestone allegedly paid German banker Gerhard Gribkowsky in 2006. German prosecutors said the money was a bribe to get Gribkowsky to wave through a $1.6 billion sale of the Formula One racing circuit to CVC, a private equity group with close ties to Ecclestone.
In a surprise 11th hour confession, Gribkowsky last year admitted to receiving the bribe from Ecclestone. A German court found Gribkowsky guilty of embezzlement and tax evasion and sentenced him to 8.5 years in prison.
Ecclestone does not deny paying Gribkowsky, but claims the German banker was blackmailing him and that the cash was hush money to ensure Gribkowsky did not inform British tax officials about the Byzantine tax and financing structure behind the billions-strong Formula One business.
A former used-car salesman, the 82-year-old Ecclestone built up Formula One from a small racing circuit to one of the world's largest sporting empires. In terms of global television audience, Formula One is the second-largest sporting event in the world after soccer.
But the racing mogul has admitted that the German bribery case could mean the end of his career at Formula One. In an interview with the Sunday Telegraph late last year, Ecclestone said Formula One owners CVC “will probably be forced to get rid of me if the Germans come after me. It’s pretty obvious, if I’m locked up.”
The companies that own the teams of racing cars that compete in the Formula One circuit might also push Ecclestone to resign as president and CEO of Formula One Management and Formula One Administration.
Ferrari chairman Luca di Montezemolo has previously said that Ecclestone would likely step aside if formal charges were made in the German bribery case.
“If Bernie is accused under this process, I think he will be the first to give a step back in the interests of Formula One,” he told the media late last year, adding “the era of the one-man show cannot continue. We are slowly approaching the end of a period characterized by the style of one man who has done significant things.”
German officials have been investigating Ecclestone for nearly two years now. The case has been cited as a primary reason CVC canceled plans for a $10 billion public floatation of Formula One last year. The company also hired a head-hunting firm to draft a short list of potential replacements for Ecclestone.
Ecclestone's German lawyer has declined to comment on the charges until they have been properly translated into English and served to his client. If the case goes to court, Ecclestone could face jail time, though bribery cases in Germany often end with the accused paying a fine with no admission of criminal guilt.