Ecclestone paid to keep banker 'quiet'
Formula One CEO Bernie Ecclestone told a German court on Wednesday that he had paid a former BayernLB banker to stay quiet and keep tax authorities at bay while acquiring the rights for his sport five years ago.
Gerhard Gribkowsky, a former employee of Germany's second-largest public sector Landesbank, is on trial, charged with selling Formula One rights in return for a bribe, with the involvement of Ecclestone.
Gribkowsky is charged with bribery, embezzlement and tax evasion in a deal that cost the bank 66 million euros ($92 million) with him pocketing about 32 million euros as part of a bribe, according to prosecutors.
Ecclestone said he was concerned that Gribkowsky could talk to British tax authorities about his businesses and, even if he was legal and correct, a tax probe might be damaging and costly.
"I had no alternative at the time," 81-year-old Ecclestone told a Munich court, saying he had paid off the banker.
"The only alternative was that the British tax authorities followed a case that would have been very expensive for me," said Ecclestone, who has immunity from prosecution for his testimony but not in general for his role in the affair.
"The tax risk would have exceeded two billion pounds ($3.2 billion)," said Ecclestone. "I paid him (Gribkowsky) to keep calm and not to do silly things. I knew he wanted to start a business."
Ecclestone said while Gribkowsky never threatened him by saying he would talk to the tax authorities, the Briton said he had lived with the constant fear of a tax probe.
"This was constantly at the back of my mind and I could not take that risk," said Ecclestone, who is the key witness in the German banker's trial.
BayernLB had a stake in Formula One up to 2006 along with JP Morgan, Lehman Brothers and Ecclestone's family trust.
The banks had acquired a 75 per cent stake in F1 holding company SLEC after the collapse of Germany's Kirch media group, which had borrowed some $1.6 billion from them. BayernLB was Kirch's biggest creditor.
SLEC was sold to the current Formula One rights holders, private equity firm CVC, in 2006 with Ecclestone remaining hands-on in running the business.
The trial follows Gribkowsky's arrest in January and is expected to last several months.