Bernie Ecclestone paid German £27m to 'keep him quiet and peaceful'

Formula 1 billionaire called as a witness in biggest corruption trial in Germany for decades

guardian.co.uk, Helen Pidd in Munich, Wednesday 9 November 2011

Bernie Ecclestone has been a powerful voice in the sport of Formula 1 for
four decades. Photograph: Vivek Prakash/Reuters

He is one of the richest men in the world with such a fierce reputation for micro-managing his multibillion-pound business that he has been described as "one of the most dictatorial men in world sport". On Wednesday, the public were offered a rare glimpse into the workings of the billionaire's world when Bernie Ecclestone the 81-year-old chief executive of Formula 1 was called as a witness in what is being billed as the biggest corruption trial in Germany since the second world war.

Though Ecclestone is not in the dock, he is accused of giving a $44m (£27.5m) bribe to an executive at a German state-owned bank in order to retain his iron rule over the lucrative motor racing industry.

Despite initially denying all knowledge of the payment now admits authorising the very big transfer. But, he explained on Wednesday, he had made it because he was being "shaken down", or blackmailed, by Gerhard Gribkowsky, the 53-year-old former chief risk officer of BayernLB, who is the one facing a possible 15-year jail sentence.

Gribkowsky, who has been in jail since his arrest in January, is on trial for accepting this "corrupt" payment. He also faces charges of breach of trust and tax evasion over his role in the 2005 sale of the bank's $839m (£526m) stake in F1 to CVC, the private equity group.

Ecclestone, it is alleged, was keen for the deal to go through because he knew CVC would let him stay the top dog in motor spot.

For most people, paying someone £27.5m would be a pretty big deal. Especially if they didn't know the recipient terribly well and were not 100% sure what the payment was for.

But not, it seems, for Ecclestone. He admitted he had paid Gribkowsky the money, but only because he feared the German might be about to tell the Inland Revenue that he [Ecclestone] was secretly in charge of Bambino, an offshore family trust controlled by his ex-wife, Slavika – a false allegation, said Ecclestone, which could nonetheless lead to a tax investigation and a colossal bill.

"I don't control the trust, but if the Revenue had investigated, the burden of proof would have been on me to prove I wasn't," he said.

That would have taken time he didn't have and money he didn't want to spend, he explained. So he paid Gribkowsky to keep schtum. "I thought it might keep him quiet and peaceful and friendly and stop him doing silly things," Ecclestone told the court.

Gribkowsky denies blackmailing Ecclestone and claims the payments he received were legitimate F1 consultancy fees.

Ecclestone was blasé about one source of his immense wealth – the $41.4m (£26m) commission Gribkowsky paid him personally out of BayernLB funds for smoothing the F1 sale. "I did a very, very good job," he shrugged. So good, in fact, that he still feels cheesed off. "I thought I deserved more," he added.

Giving evidence in a soft and occasionally croaky voice, Ecclestone admitted Gribkowsky had never made an "open threat" to tip-off the Inland Revenue. But he felt that the German was prepared to do so after Ecclestone refused to go into business with him. He worried, he said, that Gribkowsky could do "something a little bit vindictive".

"It was a risk I couldn't afford to take," he said. How much could this risk cost, asked the judge, Peter Noll. "In excess of £2bn," replied Ecclestone.

He didn't ever discuss a figure with Gribkowsky, he testified – a claim received with incredulity by the judge. "You're seriously saying you were going to transfer all that money without telling him so that he only discovered it when he went to the cash machine and checked his balance?" he asked.

Yes, insisted Ecclestone. "[Gribkowsky] wasn't the sort of person to say 'pay me this or I'll do that' and I'm not the sort of person who says 'I'll pay you this if you don't do that,'" he said.

Later he likened the situation to "one of those gangster films where the gangsters say 'we know where your children go to school and what route they take' and so forth and you know exactly what they mean."

Gribkowsky was "angry", said Ecclestone, after misunderstanding the English way of negotiating.

"I wouldn't like to say I misled him," said Ecclestone, referring to a discussion that the two men had about going into business together, "but being English, it's very difficult to say no to people. I say, 'let's think about it.' Which in English is a very clear no. People don't always understand that."

He just organised the transfer, he said, and there was the unspoken agreement that he and Gribkowsky would "decide later on what it [the $44m] was for".

Ecclestone said that $18m (£13.2m) of the money was paid to Gribkowsky via his friend, Flavio Briatore, a rich former owner of two F1 teams.

Briatore knew the reason for the payment, said Ecclestone: "I said I was being shaken down."

The case continues.

Powerful and controversial

Bernie Ecclestone, 81, born in Suffolk, the son of a trawlerman, has been a powerful voice and an extremely hands-on supremo in Formula 1 for four decades. He left school at 16 and first indulged a motorcycle hobby. Although he never made the grade as a top car racer – twice retiring from the sport in the 1950s – by the end of the 60s he was manager of Jochen Rindt, who won the F1 drivers' championship posthumously in 1970, having crashed at the Italian circuit of Monza.

Within a couple of years, Ecclestone had bought the Brabham racing team and became a key figure as he and other team leaders tried to gain control of TV rights. Brabham had mixed success on the track under his leadership although the Brazilian driver Nelson Piquet made his name in his car and won two world championships. He sold the team in 1987.