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Ecclestone: HMRC couldn't have proved anything, but....

11 November 2011

Bernie Ecclestone insists that the UK tax authorities would not have been able to prove any wrongdoing in his financial affairs, but still felt compelled to pay Gerhard Gribkowsky 'hush money' to avoid a potential investigation.

The F1 supremo admitted just that after being summoned to give evidence at Gribkowsky's trial for fraud, embezzlement and tax evasion in Munich, confirming what he had claimed when the matter first came to light earlier in the season. Ecclestone insisted at the time that the payment did not constitute a bribe to help push through the sale of F1 to CVC Capital Partners, as had been alleged, and claimed that Gribkowsky was threatening to reveal details of the billionaire entrepreneur's financial set-up.

"I must confess I have been shaken down by other people, but not quite as subtly as he did," Ecclestone told the court, "I had no alternative at the time [but to pay him off]. The only alternative was that the British tax authorities followed a case that would have been very expensive for me. This was constantly at the back of my mind and I could not take that risk. The tax risk would have exceeded £2bn, so I paid him to keep calm and not to do silly things."

Although there was no direct threat from Gribkowsky in the five years since CVC acquired the rights to the sport from a trio of German banks, Ecclestone remains confident that no irregularity would have been found with his affairs.

"I don't think they could ever have proved anything," he said, "but I couldn't afford to take the risk. It's as simple as that."

Ecclestone went on to reveal that, in his opinion, Gribkowsky had become intoxicated with life in the fast lane and, far from retiring when his employer, BayernLB, sold its share in F1, was keen to find a role to remain involved in the sport.

"They fall in love with Formula One," the 81-year old explained, "He liked the lifestyle, and made it quite clear that he wanted to leave the bank. I have no idea what he wanted to become, [but] I think he acted as if he would [like to be 'Mister F1']."

Ecclestone revealed that Gribkowsky had tended to spend a lot of time at F1 events drinking with his now ex-wife Slavica, and used his fractured relationship with the statuesque Serb to help illustrate the complexity of the family's financial set-up.

“Here's a little bit of a demonstration of what really happens,” he said, “My younger daughter got married and I thought, as father of the bride, I should pay for the wedding. But, when it was suggested how much they would be spending on drinks, I thought it was absurd and managed to upset my daughter and my wife. Then she spent in excess of £12m on my daughter's wedding - which I did not know about until afterwards.”

While Ecclestone is estimated to be worth about £2.5bn, Slavica acquired a fortune, worth around £750m, as a result of their divorce. The wedding in question featured performances by the Royal Philharmonic Orchestra and pop group The Black Eyed Peas, while the bride's dress was worth around £80,000 and guests quaffed wine that cost £4000 a bottle.....

Gribkowsky is expected to remain on trial for several weeks, having allegedly cost BayernLB around £57m and pocketed £30m. Prior to CVC's purchase, the bank had shared a 75 per cent stake in F1 holding company SLEC with fellow financial institutions JP Morgan and Lehman Brothers, and Ecclestone's family trust Bambino. The stake had previously belonged to German media company Kirch, which was in debt to the banks to the tune of more than £1.5bn. Ecclestone remained as a hands-on director following CVC's buy-in, and it is this role and CVC's acquisition that are thought to have been behind Ecclestone's payment to Gribkowsky.

While Ecclestone flew to Abu Dhabi after his appearance, his former lawyer, Stephen Mullens, is expected to appear in court today [Friday] to give evidence about alleged bribes paid to Gribkowsky regarding the sale of F1 to CVC. Mullens is Ecclestone's long-term business partner and legal adviser and, until the Gribkowsky scandal broke, held various directorships at F1-related companies. He has been named as a defendant in a separate £100m civil claim being brought against Ecclestone by another former F1 stakeholder, Constantin Medien.


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