German bank rejects Ecclestone’s settlement offer

August 10, 2014 - 12:00:00 am

Munich: German bank BayernLB that once held a major stake in Formula One has rejected Bernie Ecclestone’s offer to pay $33.4m in a dispute over the sale of that stake.

Formula One boss Ecclestone had made the offer so that his court battles in Germany would end on Friday, in settlement of a civil claim from the bank.

Earlier this week, a Munich court had dropped a bribery case against Ecclestone connected to the sale of Munich-based bank BayernLB’s F1 stake in exchange for a $100m payment.

Ecclestone’s lawyers last week had offered to pay the public- sector bank, though they said damage to the company wasn’t evident. The bank rejected the offer, without giving reasons, and didn’t say what its next move would be.

The offer expired on Friday.

BayernLB did preparatory work on a damages claim against Ecclestone late last year, but didn’t file it.

The motor-racing billionaire had paid $100m to end a criminal prosecution over his secret multimillion-dollar payments to Gerhard Gribkowsky, a banker, while he was in charge of selling F1 rights.

During the court case against Gribkowsky in Munich in 2011, it emerged that Ecclestone was paid a consultancy fee during the F1 sale process between 2005 and 2006 of $41m to help to smooth the sale to CVCCapital Partners, the present owner.

BayernLB, the bank, now wants the so-called finder’s fee back.

The transaction had been complicated by a threat to BayernLB on Thursday, that it would face a counter claim from the former owners of the F1 shares if it accepted Ecclestone’s money.

Ecclestone insisted throughout the bribery case that he was in effect blackmailed by Gribkowsky, who threatened to make complaints to revenue officials.

The banker is now serving a jail sentence.

It had emerged on Thursday that Ecclestone had delivered the settlement agreed with prosecutors and judges to have the bribery charges dropped. Most of the money, $99m, went to the state of Bavaria, which owns BayernLB. The remaining $ 1m was awarded to the German Children’s Hospice Organisation, which said on Thursday that they were “ beside themselves with joy” at receiving the money. It amounted to ten times their annual income.

BayernLB acquired the 47 per cent stake in F1 from Kirch Group, owned by the late German entrepreneur Leo Kirch, whose business empire went bankrupt in 2002 while he owed money to the bank.

Kirch’s widow, Ruth, is the main shareholder in Constantin Medien, a German company that has already lost a court case for damages of $140m against Ecclestone in London in February, over a claim that the F1 shares were undervalued.

Constantin is appealing against that ruling.

Constantin Medien stood to benefit if the F1 shareswere sold by BayernLB for at least $1bn. The sale price agreed by Gribkowsky withCVC Capital Partners, advised by Ecclestone, was $837m.

This was the deal that kept Ecclestone in charge of the sport but which led him to be charged in Munich with bribery after it emerged that he had paid Gribkowsky $44m.