Executive Privilege

In Formula One Corruption Case, Justice Loses As Ecclestone Buys a Legal Escape

  • Why it matters

    Why it matters

    The outcome of Mr. Ecclestone’s bribary trial questions justice. The impression that wealthy poeple can buy their way out of jail leaves a sour after taste.

  • Facts

    Facts

    • Mr. Eccelstone walks free after paying €75 million ($100 million) fine.
    • Gerhard Gribkowsky, the ex-banker who accepted a bribe of €44 million ($59 million), is sentenced to eight and a half years.
    • Same judge rules two ways.
  • Audio

    Audio

  • Pdf

Formula One chief executive Bernie Ecclestone arrives in the court in Munich June 25, 2014. Source Reuters
Source: AFP Foto

 

Mr. Ecclestone has spent his life making deals. His latest – and one of his best – took place in a German court room last Tuesday.

The executive had been accused of bribery but the charges were dropped when he agreed to pay a fine of €75 million ($100 million). That was the price for freedom and a clear name.

Never before has someone tried before a German court ever paid such a high fine. But the money doesn’t mean much to the multi-billionaire Ecclestone, whose expenses include €33 million ($44 million) for the weddings of his two daughters or €140 million ($187 million) for their villas.

Mr. Ecclestone is unlikely to notice the missing millions. But Germany is suffering from the way the dispute was settled. In court, money was not the only thing being bargained – the deal turned justice into a commodity that can be bought and sold. And worse yet, a one-off chance was missed. The court case could have been an opportunity to bring the all-powerful motorsport boss to book. It could have led him out of his parallel world and into the real world ruled by law.

The world of sports is not a separate universe, although it may seem like one to powerful officials who act with impunity, from Ecclestone to Sepp Blatter, president of the world football (or soccer) association Fifa, or the members of the International Olympic Committee.

These officials are indifferent to responsibility, they face no competition and their rule goes unchallenged. They reign over opaque structures and host events wherever they choose and allocate billions as they wish.

A court is the place to decide between right and wrong.

Formula One’s holding company is so complicated that only Mr. Ecclestone himself understands its setup. The organization is based on a system of dependencies between men who have worked together for decades. They would never dream of questioning their bosses, let alone the top boss. It is a cartel of silence.

That may not really matter except for the fact that sports are highly political. For instance, Brazil, an emerging economy, spent €10 billion on football stadiums instead of badly needed schools.

Mr. Ecclestone brought Formula One to the United Arab Emirates and because of the West’s sanctions on Russia, the Russian Formula One Grand Prix will take place in Sochi in October. Fifa is planning the next World Cup in Russia, before heading over to Qatar, another autocratic state. Sport’s top managers don’t mind supporting questionable regimes. The money flows from one despot to another.

Perhaps it is too much for a court of law to address all these problems. But a court is the place to decide between right and wrong. When Mr. Ecclestone purchased his freedom, it left the impression that the wealthy can get away with anything, just as long as they have enough money to pay their way out.

 

German banker Gerhard Gribkowsky, former risk manager at German bank BayernLB, at trial on May 9, 2014. Source AFP Foto

 

Of course everybody deserves a fair trial. And anyone who followed the case against Mr. Ecclestone knows that the witnesses didn’t make it easy for the prosecutor. Star witness Gerhard Gribkowsky may be greedy and ambitious but as the former chief risk officer of BayernLB – the German bank that in 2006 sold its 47.2 percent stake in Formula One to Mr. Ecclestone’s preferred bidder, private equity firm CVC Capital Partners – he is no fool

Yet in court, Mr. Gribkowsky kept contradicting himself and forgetting details, such as when Mr. Ecclestone told him, “I’ll take care of you.” The prosecutor should have dug deeper into some of Mr. Gribkowsky’s statements and broken into the cartel of silence to reveal the truth. This would have signaled that it is no longer acceptable to live in a parallel world, impervious to justice and the law.

Mr. Gribkowsky, the ex-banker, was sentenced to eight and a half years in prison for corruption. Mr. Ecclestone, who admits to paying him a bribe of €44 million, walked free. It is incredible that the same judge found the man who took the bribe guilty but not the one who bribed him.

It looks as though Mr. Ecclestone will stay chief of Formula One. After this case, people are even likely to look up to this tough guy all the more.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!