MOTORSPORT: Court actions cloud GP contract extension

German sports media company Constantin Medien is seeking US$171 million (about A$180 million) in damages over what it claims was a “corrupt bargain” initiated by Ecclestone that undervalued the Formula One business in a sale of control in the mid-2000s.

Separately a German court is to decide in the new year whether to proceed against 83-year-old Ecclestone on a charge of bribery, Swiss prosecutors have begun a criminal investigation and American investors are circling, claiming to have been prepared to pay more than private equity company CVC for the largest stake in F1.

All these actions are sure to stall again the attempt to float F1 on the Singapore stock market at a reputed value of about US$10 billion.

It was during the Singapore GP in mid-September that Melbourne’s Herald Sun newspaper reported it had been told by F1 insiders that Walker, on behalf of the Victorian government,  and Ecclestone had “thrashed out the advanced stages of a deal ... which will be put to the government for approval”.

Victorian premier Denis Napthine was quoted saying he wanted to retain Melbourne’s GP “but not at any price”.

“My message to Bernie is that we want a fair deal for Victorian taxpayers ... we certainly won’t be paying exorbitant fees to Bernie or anyone else,” Napthine said.

The event has been running at annual losses of more than $50 million for some years now, although organisers reported an improvement of about $4 million this year.

Napthine has said he has no deadline for finalisation of Melbourne’s GP contract extension, which may be just as well as it could be politically awkward to announce it among this myriad of messy legal actions against F1’s long-time commercial supremo. 

Ecclestone said last year that CVC, to whom he answers, “will probably be forced to get rid of me if the Germans come after me – it’s pretty obvious if I’m locked up”.

He has not yet appeared in the London court hearing the action by Constantin Medien but is expected to do so next week.

His legal team has already strongly contested allegations against him and denied any wrongdoing.

Constantin Medien has claimed a “corrupt bargain” was made between Gerhard Gribkowsky, a former risk manager with Bayern Landesbank, otherwise known as Bayern LB, in the sale of that German bank’s almost 50 per cent stake in F1 to CVC in 2006.

Constantin Medien claims, through its association with Bayern LB, to have been severely damaged by that sale at a price it says grossly undervalued the business.

Gribkowsky is serving an 8½-year jail term in Germany for receiving $44 million from Ecclestone that was deemed a corrupt payment by the court in his trial.

It was more than a year after Gribkowsky was jailed before Ecclestone was charged in Germany with paying a bribe and it is still not certain that case will proceed against him.

Ecclestone does not deny paying the $44 million but claims it was to get Gribkowsky to desist with threats to tell British tax authorities information about an Ecclestone family trust, Bambino Holdings, that would have been massively time-consuming – as well as potentially costly – for him.

Ecclestone and his lawyers have repeatedly described Gribkowsky’s actions as “shaking down” or blackmailing the F1 boss.

One of Ecclestone’s lawyers, Robert Miles, described Gribkowsky in the London court this week as “a fantasist”. Miles called suggestions by Gribkowsky that Ecclestone had tried to bribe him with sums of $10 million to $20 million at the 2004 French or Australian GPs as “ludicrous”.

Constantin Medien’s top lawyer in the case, Phillip Marshall, said the sale of Bayern LB’s stake in F1 to CVC for US$830 million was below the full value as part of Ecclestone ensuring he remained at the sport’s helm. Marshall claimed the sale was made “without the normal and proper process” and the combined benefit to Ecclestone and Bambino Holdings had been more than US$1 billion.

Ecclestone’s representative Miles said he would not have had any interest in undervaluing F1 as his family was selling 25 per cent at the same price.

“This is an artificial, manufactured complaint,” said Miles, although he admitted BayernLB had wanted a “rapid sale” of its stake rather than a prolonged, wider process or auction.

CVC has sold a lot of its controlling stake to other investors in the past year or so.

F1 has been one of the private equity group’s most profitable investments.

The High Court case is due to last six weeks.

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