BERLIN: A former German bank executive has been arrested for allegedly accepting a $50 million kickback in the 2006 sale of a large stake in the Formula One's rights holding company, German prosecutors said.
The former risk manager of regional public-sector wholesale bank BayernLB was taken into custody Wednesday on charges of corruption, tax fraud and breach of trust toward his former employer, prosecutors in Munich said in a statement.
Gerhard Gribkowsky was in charge of managing the sale of the bank's F1 stake to London-based buyout group CVC Capital Investment.
But prosecutors say he led the bank to sell it "without evaluation of its current value" which, in turn, earned him "two consultancy contracts totaling $50 million."
The money was paid to firms in Austria that he had set up for that purpose, prosecutors said. Gribkowsky also failed to pay millions of euros in taxes on the additional income, the statement said.
German media on Wednesday widely cited unnamed judicial officials as saying the money had been paid by firms based in Mauritius and the Caribbean, but prosecutors declined to comment or to say who had been the source of the payment.
CVC said in a statement late Wednesday that it had no further information regarding the bribery investigation against Gribkowsky.
"Furthermore CVC confirms that it has no knowledge of, nor any involvement in, any payment to Mr. Gribkowsky or anyone connected with him in relation to CVC's acquisition of Formula One," the company said Wednesday.
BayernLB, or Bayerische Landesbank, held a 48 percent stake in SLEC Holdings, which owned the companies that run the F-1 racing series. At the time, 25 percent were owned by the family trust of Bernie Ecclestone, the longtime commercial head of Formula One, and the remainder was held by other banks.
CVC bought Ecclestone's and the BayernLB's stakes and regrouped them in a firm named Alpha Prema, becoming the Formula One's majority shareholder. The price of the deal has not been disclosed.
BayernLB spokesman Matthias Luecke said the bank was closely cooperating with the judiciary on the matter. Prosecutors, however, have advised the bank to hold off an internal probe in order not to hinder the ongoing judicial investigation, he added.
Gribkowsky was BayernLB's chief risk officer and a member of the board between 2003 and 2008.
BayernLB, owned by Bavaria state's regional government and municipally backed local banks, traditionally focusses on helping to fund local businesses.
But big bets on global financial markets and large investments in securitized debt linked to the U.S. subprime housing market saw the bank tumbling during the financial crisis, forcing the government to bail it out with billions of fresh and state-guaranteed capital. - AP
Latest business news from AP-Wire