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Bernie Ecclestone will not be removed from his position as chief executive of Formula One despite facing a bribery trial during the summer, according to CVC Capital, the private equity firm which controls the sport. |
“We don’t have any changes planned at the moment,” said a source close to CVC. “The board constantly reviews facts and circumstances and the current position is that no changes are planned.”
The trial, which opens in Munich in April and is expected to last until September, has been sparked by a $44mn payment by Ecclestone and his Bambino family trust to Gerhard Gribkowsky, a former executive at German bank BayernLB (BLB) who was responsible for selling the bank’s 47% stake in Formula One to its current private equity owners. Prosecutors believe that the payment was a bribe to steer the sale of the stake to CVC as it had agreed to retain Ecclestone as chief executive.
Ecclestone recently won a related civil case in the high court in London, in which he was accused of undervaluing Formula One through the alleged bribe because other bidders may have paid more than CVC.
Although Ecclestone won the case, the judge, Mr Justice Newey, ruled that “the payments were a bribe ... under which Dr Gribkowsky was to be rewarded for facilitating the sale of BLB’s shares in the Formula One group to a buyer acceptable to Mr Ecclestone”.
After the judge’s ruling, Ecclestone insisted it was “business as usual” and he would not be stepping down despite the lack of public backing from CVC. “They never say anything,” he said at the time.
During the case in November CVC co-founder Donald Mackenzie said: “If it is proven that Mr Ecclestone has done anything that is criminally wrong, we would fire him.” The source said that CVC had decided to base its decision on the outcome of the trial in Munich, rather than the high court ruling, and he believed Formula One had not been dented by the cases.
“People have come out of the woodwork making offers thinking that it is opportunistic to do so around this court case but the proof of the pudding is that no one has sold anything,” he said. “If people were running for the door you would have seen some share sales, but not one share has traded and I think people believe in the fundamental value of this business.”
Formula One has been one of CVC’s best-performing assets and it has made a return of more than 350% in dividends and share sales from its initial $965.6m investment.
It currently holds a 35.5% stake and planned to exit in 2012 through a flotation on the Singapore stock exchange which stalled due to the eurozone crisis.
Ecclestone’s future is the biggest question hanging over the sport as he turns 84 this year and could face a prison sentence of up to 10 years if he loses the trial in Munich. Last year the CVC source said that his successor “almost certainly has to come from externally”. Outgoing Sainsbury’s boss Justin King and football Premier League chief Richard Scudamore have both been rumoured as replacements. In February it emerged that the American billionaire John Malone’s Liberty Media had teamed up with Discovery Communications to consider mounting a bid for Formula One.
The private placement memorandum for the fund which owns CVC’s Formula One stake states that the term is “10 years, subject to three discretionary one-year extensions”, which means that it has to dispose of the stake by 2018 at the latest.
Double points experiment stays at final race
Formula One teams have rejected the proposal by Formula One’s chief executive, Bernie Ecclestone, to double points for the final three races, in Austin, Brazil and Abu Dhabi, this coming season. A unanimous agreement was needed and it was not achieved when the move was discussed at a strategy group meeting, attended by Ecclestone, the FIA president, Jean Todt, and six teams. As a result double points will apply to only the final race.
The world champion, Sebastian Vettel, had described the idea of double points at all as “absurd” and added that “drivers, fans and experts are horrified” at the proposal. He was not wrong and many feel the cheapness of the gimmick undermines the integrity of the sport.
Vettel and Red Bull have dominated the past four years and last year the German won the final nine races of the season. But two of his title campaigns went down to the wire and this year promises a closer contest.
It has also been decided to abandon Fota, the Formula One Teams Association. The Fota secretary general, Oliver Weingarten, said, on Friday: “I can confirm that Fota has been disbanded as a result of insufficient funds to continue and a lack of consensus among all the teams on a revised, non-contentious mandate.”
The umbrella group has become increasingly irrelevant, particularly since Red Bull and Ferrari broke away from it. The removal of Martin Whitmarsh as McLaren’s team principal also undermined the organisation as Whitmarsh had been Fota’s chairman.
