Formula1 chief executive, Bernie Ecclestone, appeared as witness in a Munich Court on Wednesday 9th November amidst F1 sale bribery claims…
German investment banker, Gerhard Gribkowsky, stood trial in court under allegations of receiving a £27.5m bribe payment from Bernie Ecclestone in correspondence to the sale of F1 in 2006.
Mr. Ecclestone is said to have paid the bribe to the former executive of the state-owned BayernLB bank to ensure that he retained control of Formula1 following its sale in 2006 to the private equity group CVC.
Ecclestone firmly denies that the large sum was a bribe, claiming that the money was paid due to threats made by Gribkowsky in order to avoid false allegations of his tax affairs being submitted to HM Revenue and Customs.
£8m of the payment came from Ecclestone’s private account whilst the remaining sum was resourced from Bambino, Ecclestone’s offshore family trust.
Before the trial on 8 November Ecclestone told The Sunday Telegraph:
“Paying £8m is cheap compared to what it could have been – £2bn, or more. The money was paid because there was this new thing going on with tax people, who could have turned around and said we think you owe us this money. That process could have taken two or three years. And they find a way to make you pay.”
The Formula1 chief executive has been accused of breaking both German and English tax laws in connection with the £27.5m payment made to the German investment banker.
Mr. Gribkowsky, who received the payment, has claimed to HMRC that Ecclestone controls his offshore family trust, Bambino. If this is proved to be correct then Mr. Ecclestone will be required to pay UK tax on the trust’s income in accordance with UK law.
Ecclestone said he had been advised that if allegations were made by the German investment banker that he had ordered Bambino to make the payment, the offshore family trust’s balance would be subject to a 40% tax claim from HMRC.
Sven Thomas, Ecclestone’s lawyer commented on the allegations:
“You could say Bernie has been the victim here. There was a hidden threat, pressure – a sort of shakedown.
“Bambino wanted to ensure Bernie would continue as CEO because they believed if he didn’t, the value of their assets would come down. That is why separately they also paid Mr Gribkowsky.”
In court on Wednesday 9th November Ecclestone claimed that his ex wife, Slavica, had independently decided that the trust should pay Gribkowksy.
Supporting this claim in court Ecclestone said that he “never took any business problems home to [his] wife,” and that Slavica and Bambino’s trustees contributed to the payment solely due to their own fear of an HMRC investigation.
When posed the following question by German Tax authorities whilst standing trial in the Munich court:
“If you believed you were being threatened by Gribkowsky, why didn’t you ask for the £27.5m back, or tell the police?”
Ecclestone replied that, “it was one of those things in life you want to forget about.”
Commenting on the allegations made against Ecclestone a spokesman for HMRC, said:
“HMRC cannot comment on individual cases but we use information from a very wide range of sources to ensure everyone pays the right tax under the law.”
The case is set to continue.
Kevin Kinsella Jnr, of KinsellaTax, said:
“Given what was reported in the press about what Mr Ecclestone said, I am not surprised that HMRC are looking at this matter.
Whether or not it becomes a full blown tax investigation remains to be seen but if one does arise then this will take a number of years to complete.
I would be delighted to deal with it if the occasion arises.”
If you have received a letter from HMRC opening a Tax Investigation into your affairs then why waste any more time?
KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully experienced in HMRC tax investigations.