F1 boss Ecclestone says he’s not subject to U.S. laws in bribery case
F1 boss Ecclestone says that he is not subject to U.S. laws in a formal affidavit he has submitted to the New York State Supreme Court. The affidavit responds to a $650 million lawsuit filed against him and others by Bluewaters, an American private equity firm, in the ongoing case involving convicted German banker Gerhard Gribkowsky.
The Bluewaters lawsuit names Ecclestone, CVC Capital Partners (F1’s biggest shareholder), and three others in the complex chain of F1 holding companies that CVC set up — namely Alpha Prema U.K., Alpha Topco and Delta Topco. Gribkowsky and his former employer, the BayernLB bank, are also defendants in the case.
Bluewaters states in its own filing to the court in Manhattan that, in November 2005, it offered $1 billion to purchase a 47.2-percent stake in the F1 business that was being sold by BayernLB in Munich, Germany. However, Bluewater claims Ecclestone paid a $44 million bribe to Gribkowsky (then the chief risk officer of BayernLB) to undervalue that 47.2-percent stake — which it then sold instead to CVC for a reported $839 million, or effectively a price that was $161 million less than Bluewaters offered.
CVC subsequently paid about $210 million each to two other banks, JP Morgan and Lehman Brothers, for their smaller stakes in F1.
Ecclestone admitted to a German criminal court last July that he paid the $44 million to Gribkowsky. Although the court in Munich then jailed Gribkowsky for more than eight years for accepting the money as a bribe, Ecclestone claimed that it was unrelated to the BayernLB/CVC transaction. He remains adamant that he was instead being blackmailed by Gribkowsky, who he alleges had threatened to lie to U.K. tax authorities about the affairs of an Ecclestone family trust, which Ecclestone said he had spent years setting up. Ecclestone claimed that is was simply easier — and probably cheaper– to pay Gribkowski, rather than dealing with the headache of an investigation triggered by what he alleged would have been lies by Gribkowski to U.K. tax investigators.
Ecclestone’s affidavit puts it this way: “I was concerned that misinformation that he provided to the authorities might be taken seriously, and might cause them to assess me to owe a tax bill of many hundreds of millions, if not billions of pounds that I believe I did not owe but which would have caused me to become bankrupt.”
Ecclestone also claimed in the statement that he is not subject to U.S. law, on the basis that he has never resided in the U.S., owns no property here, leases no offices here, and employs nobody here except lawyers defending him in the lawsuit. He says he is a U.K. citizen living in London, and notes that he has visited the U.S. eight times since 2005, including trips to investigate the proposed Grand Prix in New Jersey, and a vacation with his family in Las Vegas. The affidavit also points out, “The various events underlying the allegations in the complaint did not take place in New York or the United States, but in Europe and the Middle East.”
It adds that the money had been moved from Swiss accounts to an Austrian account without, as far as Ecclestone was aware, any assistance from New York banks.
Bluewaters claims that the F1 business is now worth approximately $10 billion. Accordingly the company is seeking damages for “tortious interference with prospective economic advantage”, as well as “fraudulent concealment and unjust enrichment” by the defendants. The New York-based firm also wants the court to award it unspecified compensatory and punitive damages from the defendants “for their participation in a criminal conspiracy to rig the bidding process in the sale of Formula One”.
Ecclestone, Gribkowsky and others are facing another major lawsuit this year in the London High Court, brought by Constantin Media, a former owner of the shares sold by the three banks.
By: Quentin Spurring on February 10, 2013