Panorama.S2014E17.Bernie.Ecclestone.Lies.Bribes.and.Formula.One
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00:00He's the all-powerful ruler of Formula One.
00:07Formula One is Bernie Ecclestone and Bernie Ecclestone is Formula One.
00:14Bernie Ecclestone's four decades at the top of the sport have made him super rich.
00:19I think he couldn't have squeezed any more money out of it than he's done.
00:24He's pulled off what may be the UK's biggest personal tax dodge of all time.
00:29Two billion is a pretty substantial loss of tax.
00:33He can't receive payments from his family's offshore trusts,
00:37but we show how he's got hundreds of millions.
00:40He's not someone who should be relied on to tell the truth.
00:43It should be investigated.
00:45He's been branded a liar and now he's on trial in Germany,
00:49accused of paying a massive bribe.
00:53Corruption, unlawful payments, totally irregular, absolutely unacceptable.
00:58So is this the end of the road for the king of Formula One?
01:02Mr. Ecclestone, did you avoid two billion dollars in taxes?
01:06Mr. Ecclestone?
01:16Lights out, away we go, and Lewis Hamilton lights up the rear tyres,
01:20but it's Rosberg who is very slow away.
01:22And it's a good start for Vettel.
01:24Vettel chasing up in a fast...
01:27It's one of the greatest shows on earth.
01:31Formula One's mix of speed and danger
01:34is loved by millions of people around the world.
01:39It's a hugely lucrative business,
01:42generating hundreds of millions of pounds year after year.
01:46One man, more than any other, has driven the sport's phenomenal success.
01:51There's Bernie Ecclestone, the czar of Formula One.
01:55He's dominated the sport for almost 40 years.
01:58It's one of the world's top sports, fast-moving, dangerous, worldwide, global.
02:04That's all down to Bernie Ecclestone.
02:10It's made him into one of the most powerful figures in world sport.
02:15Coverage of Formula One shows him with an entourage of the rich and famous.
02:26But last week, he went on trial in Germany
02:29in a case that threatens to end his reign over Formula One.
02:36Bernie Ecclestone has staged races in just about every corner of the globe,
02:40but he cannot have imagined that the most important contest of his life
02:44could happen here at a Munich courthouse.
02:48He's accused of corruption,
02:50charged with paying a multi-million dollar bribe.
02:53He says he's innocent, but if convicted, he could face years in jail.
03:02I'm convinced it's the biggest drama,
03:05the biggest fight for Ecclestone in his business life.
03:10That's pretty much all the Formula One footage we can show you.
03:15Bernie Ecclestone has long guarded all rights to the sport
03:19and his company doesn't want us to use any pictures.
03:26We asked to film at a Grand Prix, but were turned down.
03:30So...
03:32To give you the glamour and style you're probably expecting,
03:36we've got our very own racing car.
03:39To understand Bernie Ecclestone, you need to go back to his beginnings.
03:43Bernie Ecclestone, the man behind Formula One.
03:47Bernie Ecclestone, the man behind Formula One.
03:56Bernie Ecclestone, the man behind Formula One.
04:02He's a legend.
04:04To understand Bernie Eccleston, you need to go back to his beginnings.
04:09A brilliant deal-maker, he made his first fortune selling second-hand cars,
04:15but ran into legal trouble on the way.
04:18In 1971, he was taken to court for pocketing cash that should have gone to the taxman.
04:27The judge described his behaviour as altogether extraordinary.
04:32It wasn't the last time he'd be criticised in court.
04:41Motor racing was his passion.
04:43After he stopped driving himself, he bought his own Formula One team
04:47and soon began to take control of the sport.
04:51Bernie's key vision was seeing that broadcasting was the future
04:57and that that was where the money would come from.
05:00If he could control all the broadcasting rights around the world,
05:04then that would give him an enormous amount of money.
05:09He drove hard bargains with TV companies
05:12and the cash started rolling in for the owners and drivers.
05:16We want to speak to the teams, but all that money brings loyalty.
05:21Darren McIntyre from BBC Panorama here, looking to speak to Williams.
05:25Is that Ferrari F1? An update on the response from Red Bull.
05:32Everyone in this sport is dependent on Eccleston and no-one wants to talk to us.
05:39I'm just wondering whether Force India will be able to put up someone to speak.
05:47In fact, we had to travel halfway around the world to find an insider to talk on the record.
05:56Eddie Irvine raced with Ferrari in the 1990s.
06:02You've no idea how difficult it's been to get someone to speak to us.
06:06He now owns an island in the Bahamas and this is his yacht club.
06:12Did Bernie Eccleston help make you rich?
06:15Oh, for sure he did. Back in the early days, it definitely needed someone to pull it together.
06:19It did need a ringmaster and it did need an owner.
06:23Bernie spotted an opportunity to wiggle his way in and basically, in a way, he stole the sport.
06:29He put all the pieces together, you know, was the promoter of this race,
06:33owned the TV rights of that race and just picked up crucial little jewels in the crown
06:40and then the only person the crown would fit was him.
06:43In 1995, Irvine saw Eccleston pull off his most significant deal yet
06:48when he got control of the lucrative TV rights to Formula One.
06:53The teams had previously held the rights.
06:56Eccleston was their representative and they thought he was negotiating a new deal on their behalf.
07:02But Eccleston cut a deal that meant the rights went to a company he owned instead.
07:08The teams really screwed themselves in 1995.
07:11The teams were asleep and Bernie seemed the big prize and he went for it and got it.
07:18Having taken the TV rights from the teams, Eccleston then gave them to his wife, Slavica,
07:25through her offshore company, Potara.
07:28A generous act but one which also paved the way for Bernie Eccleston
07:33A generous act but one which also paved the way for a massive tax dodge.
07:40Slavica then transferred ownership to a family trust in...
07:48Lichtenstein, a country well known as a secretive tax haven.
07:54There's no question that the arrangement has been put together
07:58to create tax planning opportunities which otherwise wouldn't be available.
08:07A few years later, one of the family trusts, called Bambino,
08:11sold off a big slice of the TV rights, bringing in profits of almost two and a half billion dollars.
08:18If Eccleston had still owned them, he'd have paid capital gains tax of up to 40%.
08:25But because they were offshore, there was no UK tax to pay,
08:29allowing his family to enjoy all that cash.
08:37Slavica has already taken out more than a billion dollars
08:41and his daughters have had millions too.
08:44Tamara Eccleston starred in her own reality TV series.
08:48Meet Tamara Eccleston.
08:50Modestly called Billion Dollar Girl.
08:55She's driven.
08:59Follow one of the richest women in the world.
09:03And when her sister Petra got married, the bill was a staggering 12 million dollars.
09:09Bernie Eccleston declined to be interviewed but said the transfer of assets to his wife
09:14was lawful and not contrived or artificial.
09:17He said they were transferred to avoid inheritance tax rules,
09:21which at that time acted in a way he and his wife considered to be very unfair.
09:29The family's Bambino trust still owned a minority stake in the TV rights.
09:35The family's Bambino trust still owned a minority stake in the TV rights in Formula One.
09:41But the company that owned the largest stake went bust
09:44and by 2005, the sport ended up in the hands of a German bank, BLB.
09:51Eccleston was desperate to maintain his role at the top of the sport,
09:55to stay in control.
09:57But the new owners, they had other ideas.
09:59The German bank wanted him gone.
10:02The bank called it the end of the Bernie Eccleston era.
10:08Senior banker Gerhard Grubkowski was in charge.
10:14Coverage of Formula One showed him and Eccleston together at a race shortly after.
10:20Their struggle for the control of the sport would result in Grubkowski going to jail
10:25and Eccleston on trial for bribery.
10:29We've pieced together the story from transcripts we've obtained
10:33of interviews carried out by the German public prosecutor.
10:37Grubkowski told him that even though the bank held the TV rights,
10:41Eccleston was still in the driving seat.
10:44He made it clear to me that he had full control over Formula One's assets.
10:49Mr Eccleston said, I'll tell you what you really control, nothing.
10:55Eccleston was effectively holding the bank to ransom.
11:01He held the keys to the network of complex deals that tied the sport together
11:06and he would only share them if he got his own way.
11:11He then made it clear that given this situation, there were two possibilities.
11:15Either he presented me with a buyer and I'd help him get the sale through
11:19or he would kick us out.
11:22If Grubkowski played ball, Eccleston promised to look after him.
11:28What Mr Eccleston said to me in this meeting was that if I helped him,
11:32then literally I will take care of you.
11:36Grubkowski took up Eccleston's offer.
11:40He chose a bidder, CVC Capital Partners, that had agreed to keep Eccleston in charge.
11:47As for Eccleston himself, he got paid a commission of $63 million for helping to do the deal.
12:00Why do you think Bernie Eccleston wanted to ensure that CVC bought BLB's shares?
12:07Control.
12:08Simple as that?
12:09His fundamental aim was to ensure that the sale was to a company that was acceptable to him
12:16a company that would enable him to run the Formula One business as he always had, with him in control.
12:28A few months later, Grubkowski got together with Eccleston to discuss his reward.
12:38They met at this London restaurant where it was agreed that Grubkowski would be paid $45 million.
12:47Half of the money would come from Eccleston and half from the family's Bambino trust.
12:53He told his lawyer that he didn't want his name to appear on the transactions in any circumstances.
13:07The deal remained secret for four years,
13:11until a journalist here in Munich discovered an obscure Austrian foundation owned by Grubkowski.
13:18His hidden wealth was revealed.
13:23The foundation's owned assets were worth around about 25 million euros,
13:29so it looked very dirty because Grubkowski couldn't have made this money with his job.
13:36Grubkowski eventually confessed to taking a bribe from Eccleston.
13:41He was sentenced to eight and a half years in jail.
13:44The judge said that he assumed Eccleston was the driving force behind the crime.
13:52Earlier this year, another judge, this time in London, also examined the payments.
13:58A media company, Constantine, was suing Eccleston in the civil courts.
14:03The lawsuit failed, but the judge still concluded that Bernie Eccleston had paid a bribe.
14:10How would you describe the 44 million paid to Grubkowski?
14:14Bribe, corruption, unlawful payments, totally irregular, absolutely unacceptable.
14:22What did the judge find about Mr Eccleston's evidence?
14:26Looking at the judgment, I'm afraid I find it impossible to regard him as a reliable or truthful witness.
14:35In other words, Mr Eccleston lied to the court.
14:41Bernie Eccleston said he was unable to respond to our questions because of the bribery trial,
14:47but would answer once he had put all the relevant facts before the German court.
14:53Which is strange, because he has talked to other journalists about the case.
15:08In fact, Eccleston's story has changed over time.
15:11When he was first asked about the payments, he denied all knowledge of them.
15:16But when he was interviewed by the German prosecutor, Eccleston had another explanation.
15:21Blackmail.
15:22This time he admitted he had paid the money, but only because he was worried Grubkowski might tell the taxman
15:29he was evading tax through the family's Bambino trust.
15:34Eccleston had put his fortune beyond the reach of the taxman by giving it away.
15:39But if the Revenue thought that he secretly controlled the family trusts,
15:44then all that money stashed in Lichtenstein could be taxed.
15:52Eccleston feared Grubkowski would tell the taxman he was evading tax through the family's Bambino trust.
16:00Eccleston feared Grubkowski would tell the taxman that he controlled Bambino,
16:06that he was the person who had set it up, the settler.
16:11Eccleston says he has never been connected with Bambino,
16:15but he feared a false claim from Grubkowski could lead to a huge tax bill,
16:19which is why he paid Grubkowski millions of dollars to keep him quiet.
16:25I was worried that Mr. Grubkowski could inform the Revenue Office that I could be the settler of the trust.
16:32That would have cost me more than two billion.
16:35Yes, you heard that right.
16:39That would have cost me more than two billion.
16:44By his own admission, Eccleston would owe an incredible two billion dollars
16:49if the taxman decided he was the settler.
16:54The German judge didn't believe Eccleston's blackmail claim,
16:58and neither did the judge in England.
17:01The judge concluded that Mr Eccleston had lied to him in relation to that
17:06and that the story of a shakedown was thoroughly implausible.
17:12I think that Bernie Eccleston went into court thinking that it didn't really matter what he said
17:18because he's above the law.
17:20He just thought that all he had to do was to go in and make some sort of, frankly, ludicrous claim
17:26and people would go, oh, yeah, ha, ha, Bernie, and pat him on the head, you know, and let him get on with it.
17:31Well, he shouldn't be allowed to get away with it. He shouldn't be allowed to get on with it.
17:34He should be held to account.
17:37What's beyond any doubt is that if Eccleston did set up the trusts,
17:41then he would face a massive tax bill.
17:45And evidence we've uncovered suggests he may be closer to them than he claims.
17:52This is Luke Argon.
17:54He told the German prosecutor he was one of Eccleston's lawyers
17:58and not only helped set up the trusts, but also ran them for a time.
18:04To some, that seems an unhealthy connection.
18:08Trustees need to be independent and to be able to exercise real trustee control.
18:16The danger of using your own professional to do that
18:21may be that the element of independence may be in question.
18:27Argon admitted to the German prosecutor that there was a risk to him being involved.
18:34I was known to the public as the advisor of Mr Eccleston, who is a prominent figure.
18:39From a tax perspective, it was always a risk if I became too close to the trusts.
18:44This would awake suspicion that Mr Eccleston was a settler of the trusts.
18:49To avoid that suspicion, Argon took action.
18:53He stepped back and his wife took his place instead.
18:57And we found other possible links between Eccleston and the trusts' affairs.
19:03This is Kensington Palace Gardens, where you'll find some of the most expensive homes in the world.
19:16In 2001, the Eccleston family paid £50 million for a home here,
19:22billed as the most opulent private residence in the country.
19:34The house was bought by one of the family trusts.
19:38But according to court papers obtained by Panorama,
19:41it was Bernie Eccleston who negotiated the price the trust paid.
19:48It's unclear why the trust bought the home,
19:51because his then-wife, Slavica, didn't want to move in.
19:55So, three years later, the family trust put the house up for sale.
20:00Court papers say that, once again, Bernie Eccleston was involved.
20:04He showed an agent for a prospective buyer around and discussed a price for the house.
20:10If Eccleston has no financial interest in the trust,
20:13why did he involve himself in buying and selling its £50 million mansion?
20:20On what basis are the trustees interested in your views as to the price at which it should sell a house,
20:27if you're not a beneficiary of those assets?
20:29That's certainly something surprising.
20:36So, one of Eccleston's lawyers set up the trusts,
20:40and he himself seems to have acted for one of them.
20:44But has he ever benefited from the trusts and all that wealth he gave away?
20:49We've uncovered evidence that Eccleston may, in fact,
20:52have ended up with hundreds of millions of dollars from the family trusts.
20:59The payments started after Slavica and Bernie Eccleston divorced in 2009.
21:05According to the transcripts we've obtained,
21:08Eccleston's lawyer told the German prosecutor
21:11that Eccleston began to get cash from his ex-wife as part of the settlement.
21:16After the divorce settlement, there were such payments.
21:19With regard to the amount, I'd rather not answer,
21:22due to my lawyer's confidentiality obligation.
21:27But another lawyer who helps run the trusts was willing to reveal the figure.
21:33Since his divorce, Mr Eccleston has been receiving payments from his wife.
21:38I don't know the exact figure, however, it must be about $100 million a year.
21:42Yes, you heard that right.
21:46It must be about $100 million a year.
21:51$100 million a year is one of Britain's biggest ever divorce settlements.
21:56The money comes from the family trusts that include Bambino.
22:00They hold the wealth Eccleston gave away,
22:03but some of the cash has come back to him as part of his divorce settlement.
22:09There have been a number of very obvious pieces of evidence
22:13about Bernie Eccleston's relationship with Bambino,
22:16and it should be investigated.
22:22The German prosecutor appears to believe there is little separation
22:26between Eccleston and the Bambino family trust.
22:31Eccleston is accused of being behind the whole $44 million bribe to Krupkowski,
22:37even though half was handed over by the trust.
22:41He paid money to the German banker at the same time
22:44as the trust paid money to the German banker.
22:46I'm sorry, but there are some obvious questions that arise out of this.
22:50Eccleston has pulled off one of the biggest personal tax dodgers
22:54in British history,
22:56managing to shield potentially $2 billion from the taxman.
23:01$2 billion is a pretty substantial loss of tax.
23:05I'm certainly not aware of anything else remotely approaching
23:09that sort of magnitude in my fairly extensive experience.
23:15Bernie Eccleston told us he personally paid
23:18£51.75 million in tax last year.
23:22He said,
23:24I am proud to be British, proud to live in Britain,
23:27and proud to make my contribution by paying my taxes here.
23:30My divorce is a private matter.
23:36So what does the British taxman make of this?
23:39Her Majesty's Revenue and Customs doesn't comment on individual cases,
23:43but our transcripts show the revenue spent nine years
23:46investigating the trusts before offering them a secret deal.
23:51In summer 2008, the Inland Revenue offered to conclude the matter
23:56if we paid £10 million.
23:58We decided to pay up.
24:01So an arrangement that Eccleston admits has saved $2 billion in tax
24:07was secretly signed off by the taxman
24:10in return for a £10 million payment from the trusts.
24:14That may just be a reflection of the evidence,
24:17but the trusts make that kind of money in interest payments alone
24:21every six weeks.
24:25£10 million may sound like a lot to some people,
24:28but you have to look at it in the round.
24:30And if we're talking about a trust fund
24:32in which they are making huge amounts of money like this,
24:35then it isn't very much, is it?
24:39A lawyer for the Eccleston Family Trusts in Lichtenstein
24:43said the judge in London had completely exonerated them
24:46from any wrongdoing,
24:48and that Mr Eccleston has not exerted,
24:50and has never sought to exert,
24:52any control over the management of the trusts.
24:56They said the German prosecutor transcripts we've quoted
24:59contain errors, but didn't say what they were.
25:06Slavica Eccleston's lawyer said her estate planning
25:09was based on legal advice,
25:11and that the family trusts were managed by appointed trustees
25:15who do not include Bernie Eccleston.
25:18Mrs Eccleston is entitled to privacy and confidentiality
25:22in her tax and personal affairs.
25:26HEARTBEAT
25:40The German court case is scheduled to last six months.
25:44Eccleston is facing the same judge
25:47who previously jailed Rybkowski,
25:50and who said Eccleston was the driving force behind the crime.
25:55Even if he is convicted,
25:57the great dealmaker may have one last card to play.
26:00Under the German legal system,
26:02he may be able to avoid going to jail
26:04by paying a multi-million euro fine.
26:09In any other business,
26:11Eccleston would surely have been fired already.
26:14He's been told by CVC, the sports owner,
26:17he'll be sacked if found guilty.
26:20What do people in Formula One really think about Bernie Eccleston?
26:23They'd be jealous of the money that he's made, you know, for sure.
26:27You know, cos he's made all...
26:29He's richer than all of them put together.
26:31Probably five, ten times over.
26:34Do you have any sympathy for him right now?
26:37Not really. Bernie knows what he's doing.
26:41Some of those close to Formula One
26:44think the Bernie Eccleston era may be far from over.
26:48He's been in scrapes of one kind and another all of his life,
26:52Bernie always comes out on top.
26:56I'd be amazed if this turns out to be the one situation
26:59that Bernie can't deal his way out of.
27:01Not only will it not involve him going to prison,
27:04it'll probably involve him continuing to be in control of Formula One.
27:09Bernie Eccleston has repeatedly avoided our questions
27:12about his tax affairs.
27:14We caught up with him outside court.
27:17Mr Eccleston, Dara McIntyre, BBC Panorama.
27:20Mr Eccleston, did you avoid $2 billion in taxes?
27:24Mr Eccleston?
27:25Mr Eccleston, why won't you answer our questions?
27:36He won't answer our questions,
27:38but the taxman is again investigating his relationship
27:41with the family trusts.
27:43Many people have come to the conclusion
27:45that he is not someone who should be relied on to tell the truth.
27:48It seems to me that there is something wrong
27:50and it should be investigated.
27:57One of the world's biggest sports is run by a serial liar,
28:02who two judges have said paid a multimillion-dollar bribe.
28:06So what will it take for Bernie Eccleston
28:09to be removed from Formula One?
28:13Wednesday, 9pm, a Panorama special.
28:16Undercover filming exposes the distress of poor care.
28:23In different care homes, what relatives don't see?
28:26Behind closed doors, elderly care exposed.
28:34Crime Watch next.
28:36And then on the BBC News at ten,
28:38a special report from inside Syria's rebel-held city Aleppo.