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Court Cases

Ecclestone gets out of jail, not quite for free

Is German law a two-tier system? With Bernie Ecclestone's high-profile trial ending with a large settlement and no time in jail, many are wondering if the courts favor the wealthy.

In a highly controversial decision, a state court in Munich has agreed to end the bribery trial of Formula I boss Bernie Ecclestone in exchange for a $100-million (75 million euros) payment from him.

In an interview with the Deutschlandfunk radio station, Germany's former Justice Minister Sabine Leutheusser-Schnarrenberger of the pro-business Free Democrats said the move "is not be consistent with the spirit and purpose of our legal system." She added, "It fills me with considerable unease."

Ecclestone was accused of having paid former BayernLB executive Gerhard Gribkowsky a bribe of $44 million to facilitate the sale of F1's commercial rights to their current holders, CVC Capital Partners, eight years ago. In charge of the bank's Formula 1 stake from 2003 to 2008, Gribkowsky is believed to have accepted the offer and sold the stake to the British investor in 2006.

Having openly resented the fact that bankers were in the F1 driving seat, Ecclestone would most certainly have welcomed Bayern LB's decision to sell. Nevertheless, he told the German court that Gribkowsky had blackmailed him, threatening to set into motion a tax audit against Ecclestone.

Judges in Ecclestone's bribery case

The judges in the case accepted a settlement with Ecclestone

Record ruling

The settlement reached after a trial that lasted just 22 days has been widely hailed as the highest amount ever paid in a criminal case in Germany. According to Leutheusser-Schnarrenberger, the amount on the table went to show that "there must be significant evidence of wrongdoing, since the accused faced a sentence of up to ten years." In such a case, she said, there should be no margin for negotiation.

Gerson Trüg, an expert on business law based in Freiburg, disagrees. He says the outcome of the trial is not a deal, as such. Usually, a settlement reached by the prosecution, defense and the court is geared to reducing a sentence if certain conditions are met. "In this case, a trial has been brought to an end in return for a payment," he explains. "It's the sort of thing that happens on a daily basis in business trials and is nothing unusual."

The court based its decision on Paragraph 153 A of the German Penal Code, which allows defendants to "buy" the end of their trial in certain circumstances. The statute results in the termination of over 100,000 cases per year. As Trüg explains, large sums of money tend to be involved. "It all depends on the financial means of the accused," he remarks.

F1 head Bernie Ecclestone departs from court

Ecclestone was able to leave the court a free man

Concerns of a two-tier system

Legal expert Trüg cites a more mundane example, saying a case involving repeated use of public transportation without a ticket could theoretically be terminated in return for a payment that reflects the financial standing of the accused. "Had Ecclestone been on trial for using public transport without a ticket, he would have been asked to pay more than a few hundred euros," says Trüg.

Ecclestone was of course accused of far more than riding the subway for free, prompting many in Germany to ask if the country's courts operate on a two-tiered system. Not so, says Trüg, who stresses, "Each case must be considered individually."

At the trial in question, Trüg explains, the court doubted the testimony of the prosecution's main witness and therefore concluded that the gravity of wrongdoing did not stand in the way of terminating the trial, one of the conditions for using clause 153 A.

But has Ecclestone effectively bought his freedom? "You could always choose to see it that way," says Trüg, "But there is no court in the Western world that doesn't allow for gray areas, which eases the burden on court hearings for financial crimes."

High as the figure is, it is obvious why Bernie Ecclestone wasted no time agreeing to pay $100 million. It allows him to walk out of court a free man - found neither guilty nor innocent - since according to the terms of such deals, settlements do not imply an admission of guilt. It also means he can remain at the helm of Formula 1.

Former F1 world champion Niki Lauda welcomed the court's decision, telling the daily "Süddeutsche Zeitung" that it gives Ecclestone a clean slate. "He did everything right," Lauda said. "It puts an end to all of the speculation surrounding Bernie and the future of Formula 1. Continuity at the top of motor racing is important."

Gerhard Gribkowsky

Gribkowsky is currently serving an eight-and-a-half-year sentence

Lessons learned?

Many in the German media, however, have decried the settlement as scandalous. An editorial in the left-leaning "Frankfurter Rundschau" called for a fundamental overhaul of the rules on settlements, while Leutheusser-Schnarrenberger deemed the decision "not only tasteless, but insolent."

"The wording of the law must be finessed to reflect the gravity of wrongdoing," she said.

Trüg plays down the significance of the case. "I personally do not see it as scandalous," he says. "I am certain that the Higher Regional Court in Munich considered the case very carefully."

After all, it is the same court that handed down an eight-and-a-half-year jail sentence to Gerhard Gribkowsky, and also put former president of German football club Bayern Munich Uli Hoeness behind bars for tax evasion. A big name and a wallet to match haven't been enough to keep everyone out of prison.

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