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After a cat-and-mouse game lasting more than 20 years, this week the British tax authority finally caught up with Bernie Ecclestone.
At Southwark Crown Court on Thursday morning, the former motor racing mogul admitted guilt in a prosecution brought by HM Revenue & Customs that had been set to go to trial next month. At the start of the hearing, the diminutive 92-year-old businessman was gently guided to his feet by his lawyer as the clerk read the fraud charge to him.
When asked whether he admitted the charges, he replied quietly “I plead guilty”.
Later Ecclestone moved into the glass-fronted dock for his sentencing watched by his wife Fabiana Flosi, 46, sitting in the public gallery dressed in a light blue trouser suit.
Ecclestone, the mastermind behind Formula One’s transformation into a multibillion-dollar global enterprise, agreed to pay £652mn in back taxes, interest and penalties — according to tax experts the largest ever settlement of its kind. He also received a 17-month jail sentence, suspended for two years.
When sentencing, Mr Justice Simon Bryan told Ecclestone of the “undoubted seriousness of your offending” but suspended the incarceration partly in view of the defendant’s age, health and lack of previous criminal convictions.
Clare Montgomery KC, Ecclestone’s lawyer, told the judge that her client “bitterly regrets the events that led to this criminal trial”, and that his actions amounted to an “impulsive lapse of judgment”. Ecclestone declined to comment when contacted by the Financial Times.
Tax issues have dogged Ecclestone for decades. HMRC first opened an investigation into his finances in the late 1990s after he transferred his shares in F1 to the second of his three wives, Croatian-born Slavica Radić. The shares would later move into Bambino Trust, with Ecclestone’s children and Radić named as beneficiaries. The pair divorced in 2008 after 24 years of marriage.
The tax authorities reached an agreement with Ecclestone related to the trust in 2008. But that deal was rescinded in 2014 by HMRC, which argued it had been “misled” and that the agreement “relied on representations that were false”. So began another running battle, with the taxman seeking payment for a bill estimated to be about £1bn.
This week’s case, brought last summer, hinged on a single meeting between Ecclestone and HMRC in the summer of 2015 at the offices of Alvarez & Marsal, the businessman’s tax advisers. Asked then whether he was linked as a settlor or beneficiary to any other trusts outside the UK, he replied: “No”.
“That was a lie,” Mr Justice Bryan said in his sentencing remarks on Thursday, adding that Ecclestone was in fact linked to two trust structures and a connected Singapore bank account containing “very substantial” funds.
Nimesh Shah, chief executive of tax advisory Blick Rothenberg, said the large size of the settlement was partly the result of rule changes that came into effect in 2016 designed to make the penalties for failing to declare overseas assets “really severe”.
“This case has been rumbling on for a number of years. Had it been settled a while ago, the penalty would have been a lot lower,” he said. “The world of tax has changed. HMRC has been slowly turning the screw. I think they will want to use this at some point to say they won’t tolerate offshore tax avoidance and we’re coming to get it.”
Ecclestone is also no stranger to the inside of a courtroom. One of the triggers for the HMRC investigation was a criminal prosecution in Germany of Gerhard Gribkowsky, former chief risk officer for German bank BayernLB, which was once a major F1 shareholder.
In the German case, Ecclestone was accused of paying Gribkowsky, jailed for eight years in 2012, to ensure F1 was sold to a party that would keep him running the sport. Ecclestone, who faced 10 years in prison for bribery in the German courts, maintained the payment was a shakedown and walked free after paying $100mn under a German law in which criminal cases can be settled with financial penalties but with no admission of guilt.
Ecclestone, the son of a Suffolk fisherman and a housewife, left school at 16, and later became a successful used car salesman. After briefly trying his luck as a racing driver, he bought the Brabham Racing team, beginning a relationship with F1 that would transform it from a hobby for rich car enthusiasts into the multibillion dollar global sports business it is now. His own wealth has soared in tandem; Forbes estimates the net worth of the Ecclestone family to be $2.9bn.
Those in the industry credit him in particular for spotting the opportunities for F1 in both broadcasting and sponsorship way ahead of many others working in sport. During his tenure, he rubbed shoulders with presidents and prime ministers as he sought to take F1 to new markets.
He developed a particular affection for Vladimir Putin, describing him over lunch with the FT in 2017 as a “first-class person”. A few months after Russia’s invasion of Ukraine, Ecclestone said he would still “take a bullet” for the Russian president.
After almost 40 years running F1, Ecclestone left the role of chief executive shortly after US group Liberty Media bought it for $8bn in 2016 from private equity firm CVC Capital Partners.
Following Thursday’s hearing, Ecclestone chose not to hide away. Instead he made the short walk from the court along the river Thames in central London to Borough Market, where he was spotted soon after queueing up to buy doughnuts.
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