Motorsport: An unregulated market?

Printer-friendly versionSend to friendPDF version

A German Court sentenced the former chief risk officer of a major German Bank to eight and a half years in prison after he admitted taking a bribe from senior Formula One official Bernie Ecclestone. Jonathan Russell gives details in the British newspaper, “The Telegraph”.
 
In 2005, Gerhard Gribkowsky, at that time chief risk officer of BayernLB based in Munich, sold the banks 48% stake in the Formula One holding company for US$ 840m to CVC Capital Partners in Luxembourg. The business connection to CVC was arranged by Bernie Ecclestone, the principal of Formula One. As a side deal Gribkowsky received US$ 44m and Ecclestone US$ 41m. Since the banker hid the money from his employer BayernLB and German authorities, German prosecutors charged him for tax evasion, bribery and embezzlement and close to the end of court proceedings Gribkowsky confessed. However, the status of the payments is still disputed; while the court judged them as acts of bribery and “unjustified commissions”, Ecclestone perceives his part as a justly earned 5 per cent commission fee. He stated that he paid Gribkowsky only because he felt blackmailed by the banker.
 
The deal and its consequences demonstrate that the much needed Corporate Governance is still under development in some business areas. Provisions and commissions are connected to many business transactions but shady backroom deals are a risk for employers and the public. The risk is not limited to possible bribery and blackmail as a major allegation in the case was that the stake was sold for a price far under its actual value.