Swiss Prosecutors Launch Criminal Probe Into Formula One Bribery Scandal
Swiss prosecutors "have begun a criminal investigation into the Formula One bribery scandal, potentially opening another front in the legal battles being fought" by F1 CEO Bernie Ecclestone, according to Robinson, Blitz & Shotter of the FINANCIAL TIMES. Prosecutors in Geneva "will examine the circumstances" of a $44M payment to German banker Gerhard Gribkowsky, who worked on the motorsport’s sale to private equity group CVC in '06. Some former F1 stakeholders "claim the deal undervalued the company." Any new investigation of the sale "may complicate CVC’s efforts to float F1 later this year." CVC previously attempted to float F1 -- one of the most profitable deals in the private equity group’s history -- in '12 but "pulled the initial public offering because of market turmoil." The investigation by Swiss prosecutors "was triggered by the receipt of third party complaint." It "will attempt to establish the facts of the case, whether it falls under Swiss jurisdiction and whether the payment was criminal under Swiss law." No charges "have been laid." Ecclestone and Bambino "did not respond to emails asking for comment" (FT, 10/28). REUTERS' Estelle Shirbon reported Ecclestone "was accused of making a 'corrupt bargain' that cost a German media firm millions in a London court on Tuesday, one of multiple legal challenges that threaten his control of the motor sport." Media group Constantin Medien is seeking more than $100M in damages from Ecclestone, "arguing that he and three other defendants deliberately undervalued Formula One when private equity fund CVC Capital Partners bought into the business in 2005." Constantin Medien "had an interest in the sale of German bank BayernLB's stake in the motor sport to CVC, and Constantin says it lost out as a result of the undervaluation" (REUTERS, 10/29). In London, Tom Cary reported the suit "is the first of several cases around the world, all of which are linked to ongoing bribery allegations in Germany." The central charge against Ecclestone, which is still being investigated in Germany, is that he paid $44M in bribes to a German banker to engineer the sale of the sport to present owners CVC Capital Partners in '05. German prosecutors "are likely to be watching closely to see what happens in the High Court," where Constantin Medien "will argue that Ecclestone and three other defendants deliberately undervalued Formula One." Constantin claims that CVC "was Ecclestone’s preferred buyer as it had agreed to retain him as F1’s chief executive" (TELEGRAPH, 10/28). In London, Duncan Robinson reported Ecclestone "was not present" when the legal battle kicked off at the High Court. Ecclestone denies that F1 "was undervalued and is vigorously contending the lawsuit." Constantin Medien "had sought to put the details of the German indictment on file in the case at the High Court" -- a move that Ecclestone’s lawyers had contested. Acting for Constantin Medien, Philip Marshall said that the German indictment revealed a "corrupt bargain" between Ecclestone and Gribkowsky (FT, 10/29).