Bloomberg News

BayernLB Sought Quick Sale of F-1 ‘Circus,’ Ex-Chairman Says

November 02, 2011

Nov. 2 (Bloomberg) -- Bayerische Landesbank’s administrative board sought a quick sale of the lender’s stake in the Formula One “racing circus” to CVC Capital Partners, the lender’s former administrative chairman told a Munich court today at a bribery trial involving an ex-bank official.

“We wanted to get rid of the Formula One stake as quickly as possible as we as a bank didn’t understand this racing-circus business,” said Kurt Faltlhauser, who headed the lender’s administrative board from October 1998 to the end of June 1999 and from July 2002 until July 2005. “The price we were offered by CVC was surprisingly high and it came as a great relief.”

Faltlhauser testified at the trial of Gerhard Gribkowsky, a former chief risk officer at BayernLB, who is charged with taking $44 million in bribes to facilitate the 2005 sale of the Munich-based bank’s 47 percent stake in Formula One to CVC. The trial is also scheduled to feature testimony from Formula One Chief Executive Officer Bernie Ecclestone.

Ecclestone, who is also being investigated, wanted to push BayernLB out and saw a chance when CVC showed interest, prosecutors said in the indictment. Ecclestone and Gribkowsky agreed on a plan that funneled $44 million to Gribkowsky through sham contracts and off-shore companies, according to prosecutors.

High Fee Payment

“The management board didn’t tell the administrative board about the high fees included in the sales agreement,” Faltlhauser said. “I could well imagine that this was deliberately ignored to get the deal done,” he said, adding that he wouldn’t have allowed “such a high fee payment.”

The state-owned lender’s administrative board is comparable to the supervisory board at listed companies. Under Germany’s two-tier system, the management board is responsible for day-to- day operations while the supervisory board’s task is to oversee the management board and appoint its members.

Gribkowsky’s lawyer Rainer Bruessow has said the allegations will collapse. CVC had no knowledge of any payment to Gribkowsky, the company has said in an e-mailed statement. Ecclestone, who has denied any wrongdoing, is scheduled to testify next week.

BayernLB received the Formula One stake as collateral during the 2002 bankruptcy of Leo Kirch’s media group.

--Editors: Anthony Aarons, Christopher Elser

To contact the reporter on this story: Oliver Suess in Munich at osuess@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net


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