Blog: Time for Bernie to go
All of a sudden, the show was over. The troupe had left town, leaving only an eerie and silent swirl of litter scattered behind. After all that time – all that excitement, anticipation and tension – it was like flicking a switch. Bernie Ecclestone’s court case was finished, the criminal charges dropped.
The accusation that the president and CEO of Formula One Management faced is by now oft-repeated – that he bribed a German banker called Gerhard Gribkowsky, formerly the chief risk officer of Bavarian state-owned bank BayernLB, to undervalue its shares in the sport when it was sold to present owners CVC eight years ago, as said deal would allow Bernie to retain control of the sport's reins. And the recipient of the cash Gribkowsky just so happens to be sitting in prison as a result of it all.
Bernie didn’t contest that he made the payment, but insists that it was instead a response to blackmail from Gribkowsky, as he was threatening to go to HMRC on Bernie’s involvement in the Bambino Holdings trust, which had the potential to land him with a large tax bill. Bernie insists that too is all above board but was worried about Gribkowsky making false claims and thus paid up.
Vindication then? Well, not entirely. Bernie and his team instead of allowing the case to reach its conclusion managed to call it all off early via the use of a loophole in the German legal system.
Paragraph 153a to be precise, which says that in certain circumstances, and if both parties plus the judge agree, a trial can be ended in return for a financial payment. And Bernie stumped up $100m to this end.
Various noises have emanated since saying that a guilty verdict perhaps wasn’t likely had the thing reached its natural conclusion. This included from the presiding judge, and it was indeed the prosecution who, according to Bernie, initiated this settlement. So possibly they knew which way the wind was blowing and were minded to save face.
But it seems a curious situation whichever angle that it is viewed from. The idea apparently behind the loophole is to ease burden on the courts and the like, but it does have a rather glaring, gaping (I’d have thought) unintended consequence. That it is likely to be the very wealthy, and only the very wealthy presumably, who are able to fork out. Meaning that the very wealthy can in effect buy their way out of criminal charges and possibly out of going to prison. In turn driving a horse and cart through that most important of principles that we are all equal before the law.
The loophole has been criticised, and Former German Justice Minister Sabine Leutheusser-Schnarrenberger said of its use here as ‘not just bad taste - it's really insolent’.
I don’t profess to be an expert on the German legal system but as ever a chain is only as strong as its weakest link, and with a lot of the world watching the system doesn’t emerge therefore from this case with much credit.
The irony – and absurdity – of a bribery case being abandoned on the grounds of the accused briber offering up enough money to make it stop wasn’t lost on too many. Novelist Ian Rankin for one likened it to getting off with a charge of arson by burning down the court.
Whatever is the case we may reflect that paying $100m might not ordinarily be the behaviour of one entirely confident that the case was going his way (it’s ironic also given that paying up to make some bother go away but not at all as any admission of guilt was his defence for making the Gribkowsy payment in the first place). And given the area that Bernie’s reputation had got to he could really have done with the vindication of a not guilty verdict rather than this apparently easy out.
Perhaps that’s exactly what Bernie should have done. Indeed, the man himself appeared to concur; after the trial officially ended he before the day was out declared himself ‘a bit of an idiot’ for stumping up.
The outcome as mentioned didn’t strike very much like a satisfying conclusion; more that things had been cut off rather abruptly mid-stream arbitrarily and unfairly. A sore being left to fester, rather than one cleansed.
With a guilty verdict Bernie – he of unparalleled influence over the sport for upwards of 40 years – as admitted by CVC would have been a goner in F1 terms. With this match abandoned outcome we have yet to hear the firm’s take on all of this, and Bernie in effect is an employee of that entity. Bernie himself before the day was out however made it clear too that as far as he is concerned he is to continue his work as if nothing’s happened.
But should he carry on as before? I have been of the view for a while that we've long since passed the point at which Bernie not only has outlived his usefulness, but at which he's started to hold the sport back on a few levels. I’ve been thinking that for various reasons; the court case not the least of them.
But not the only one either. And to borrow from Rahm Emanuel, one should never let a serious crisis go to waste. Perhaps around about now is an opportune moment to do the deed.
The murky drip-drip from the CVC deal that Bernie penned may now be just about over, but the resultant dirt and stench from the damp still linger. Bernie still seems rather damaged goods.
There have been a swarm of court cases related to the deal, and whatever their outcome including the not entirely satisfactory one we’ve just had they remain rather embarrassing to the sport, including one earlier this year wherein the judge described Ecclestone as not 'a reliable or truthful witness'. And even if we take what his line of defence was, that of paying someone not to report him to the tax authorities, even then doesn’t strike necessarily as being the act of an absolute paragon of rectitude.
The CVC deal is regrettable to F1 and by extension to us watching on for plenty of reasons in addition to those already outlined. Partly because the venture capitalists have now for years taken revenue from the sport that it can hardly do without, as well as is planning apparently to load the sport with a billion dollars’ worth of debt. Partly also because it obliges Bernie to follow the money even more than he'd be minded to do anyway – CVC caring only for the bottom line it seems. And this has tended to manifest itself in demanding vast hosting fees from venues, which has had the multiple negative impact of both sky-rocketing ticket prices at existing Grands Prix as well as taking the sport away from its core support to up sticks instead in new territories, where in a lot of cases the locals don’t appear all that interested.
This even worse often associates the sport with, shall we say, questionable governing regimes who wield the chequebooks (though Bernie’s never had a great record on that one – being after all the last out and first back into apartheid South Africa).
It’s also manifested itself, indirectly, in the notorious double points on offer in this year’s final round in Abu Dhabi – something that I‘ve yet to meet an enthusiast of other than Bernie himself – given that’s thought to have been brought in as a means of extracting a higher fee from that host.
It's also more lately started to manifest itself in the sport demanding vast fees for TV rights, meaning TV coverage disappearing behind paywalls. In other words the fans are the ones to miss out, and to fork out.
There may be yet more consequences of it all still. Sauber team principal Monisha Kaltenborn in Hungary recently spoke of F1 as a ‘fantastic product, comparable to any big, global platform, comparable even to football or the Olympic Games’. It’s true too – F1 is up there in terms of international reach, and unlike those other two gargantuan events that Kaltenborn mentioned has the additional benefit of being an annual and year-long event.
And yet still there are plenty of F1 cars with barely a sponsor on them. And taking those away that are related to team ownership, to technical tie-ups or brought by drivers, suddenly F1 sponsors become a highly endangered species. Vast global brands whom you would have thought perfect for an F1 audience (McDonalds, Black & Decker…) are nowhere on the radar. Meanwhile in other forms of motor sport with nothing like the same expansive reach – such as NASCAR, Indycar, DTM – the machines are handsomely liveried.
Williams’ title sponsorship with Martini announced at the start of the season seemed the first time in years that such a deal had been struck in this game. That’s because it probably was. And this lack of sponsorship investment only hastens the vicious cycle described.
It doesn’t seem all that unlikely that F1’s general image of being amoral – related no doubt to Bernie’s adventures, the sport’s cosying up to unpleasant regimes and the like – is part at least of the explanation. After all such corporate entities are rather careful when it comes to who they associate with, and the resultant risks to their brand. Perhaps too it loses the sport fans, current and potential, and other investment.
Bernie on a personal level has in addition has continued to make the sport look foolish at regular intervals with cringe-worthy comments – those on Vladimir Putin and homosexuality being merely the latest.
He also has something of a mental block on internet and social media coverage – by his own admission on the grounds that he sees it all as something he can't make money from rather than appreciating its intangible benefits (‘No. We’re commercial…If they find people to pay us [to do that] then I will be happy’), particularly in terms of what younger people expect in terms of coverage these days. The young person's lack of love for F1 – and for the automobile more generally – probably is the sport's biggest future challenge.
Of course we all know what Bernie's done for the sport (though he's taken a lot too let's not forget), but everyone has a shelf life. Harsh? Yes - but this is a harsh business. Bernie should know this better than most. He seems one of the last who should be pleading for clemency on the grounds of sentimentality.
And if nothing else he's 83 years old; 84 this year. Even were this the best of times the end of his era at the sport’s helm would have to be considered as nearing its final act. The post-Bernie age in F1 is an inevitability. The most responsible thing – indeed the thing that any responsible organisation would do – would be to seek to take control of it rather than run the many risks of being caught on the hop when the day comes. If such a plan exists vis-a-vis Bernie then it's been kept well under wraps.
But at the broadest level, and even if none of the above was the case, Bernie generally appears a man out of time.
F1 is ripe for corporate management. The age of the rogue – of which Bernie definitely is one – generally has now passed and has been replaced by corporate squeaky-cleanliness. Indeed, as F1 journalist Joe Saward noted, this is the point of the life cycle that F1 appears at anyway. The mavericks build something up, then the more sober sort consolidate.
‘It is, in truth, a pattern that has been repeated over and over’ said Saward recently. ‘The trailblazers go in and create a colony, the entrepreneurs give it dynamic growth and then the administrators are required. There is no room after that for the buccaneers. A calmer future beckons.
‘If other sports can make corporate management work, there is no reason why F1 cannot.’
And as Saward noted further on the recent lingering court cases ‘none of it is good for the sport and in a corporate world this would not happen. And this is why one has to eventually reach the conclusion that a corporate structure is best for the future of F1. Transparency is good. More sensible financial structures are essential and a new age can then begin.’
As George Harrison – himself a big F1 fan – once noted, all things must pass. Even the longest and most glittering reigns have to come to an end. And just as was the case with his court case, for Bernie no matter how long he has lingered it is high time that the show was over.
Author: Graham Keilloh
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