Alleged corruption in Formula One Group buyout

German prosecutors suspect that Gribkowsky received $50m - paid from offshore accounts - as an illegal commission for his role in the sale of the FIA Formula One Championship management company.

BayernLB saw its debt in Formula One holding SLEC converted to equity in 2002, when former owner Kirch collapsed. Despite owning only 25% of the group, Bernie Ecclestone's Bambino Holdings remained in control of Formula One Group's board. Following a drawn out legal battle, the bank eventually took over the management company.

Despite stating it would hold on to Formula One for "three to five years", BayernLB sold its stake - alongside Ecclestone, who reinvested - to CVC vehicle Alpha Prema in 2005. The buyout was later valued in the region of $1.7bn. Gribkowsky, then chief risk officer at BayernLB, reportedly played an instrumental role in the sale and joined the board of Alpha Prema.

German prosecutors claim they found evidence that the money was paid in return for Gribkowsky agreeing to sell BayernLB's stake without a current valuation being carried out. They also believe the payments were disguised as consultancy contracts; Gribkowsky was therefore arrested on suspicion of corruption, tax fraud and breach of trust, but hasn't been charged for the time being. Sources of the payments remain unknown.

Both BayernLB and CVC have denied any knowledge of the payments. The private equity house has also reportedly mandated Ernst & Young and Freshfields Bruckhaus Deringer to investigate the circumstances surrounding the 2006 buyout.

Without any evidence as to who might have bribed Gribkowsky, it is too early to determine whether the corruption allegations will cast a shadow over the asset when CVC comes around to selling it. But the case might put private equity players under further scrutiny - especially since the FSA is set to increasingly clamp down on dubious practices when the UK Bribery Act comes into effect in April.

Click here to find out more about the Bribery Act's impact on private equity

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