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After more than two decades of cat-and-mouse, the UK tax authorities finally caught up with Bernie Ecclestone this week.
The former racing tycoon admitted the prosecution at Southwark Crown Court on Thursday morning, brought by HMRC, which is due to be heard next month. As the hearing began, the diminutive 92-year-old businessman was gently guided by his lawyer to stand as a clerk read him the fraud charges.
When asked if he admitted the charges, he calmly replied “I plead guilty.”
Later, as Ecclestone walked into the glass-fronted dock to await sentencing, his wife, Fabiana Flosi, 46, sat in the public gallery wearing a light blue pantsuit.
Ecclestone, the mastermind behind Formula One’s transformation into a multi-billion dollar global business, has agreed to pay £652m in back taxes, interest and penalties – the highest ever, according to tax experts The largest settlement of its kind. He was also sentenced to 17 months in prison, suspended for two years.
In handing down sentence, Judge Simon Bryan told Ecclestone “there is no doubt that your offending was serious” but suspended a jail sentence due to the defendant’s age, medical condition and lack of previous criminal convictions.
Ecclestone’s lawyer, Clare Montgomery KC, told the judge her client “deeply regrets the events leading up to this criminal trial” and that his actions amounted to an “impulsive lapse of judgement” . Ecclestone declined to comment when contacted by the Financial Times.
Tax issues have dogged Ecclestone for decades. HMRC first came into contact with him in the late 1990s after he transferred his F1 shares to the second of his three wives, Croatian-born Slavica Radić. Investigate the financial status of the company. The shares will then be transferred to the Babineau Trust, with Ecclestone’s children and Ruddick named as beneficiaries. The two divorced in 2008 after 24 years of marriage.
The tax authority reached an agreement with Ecclestone in 2008 over the trust. But the agreement was revoked in 2014 by HM Revenue and Customs (HMRC), which said it was “misleading” and that the agreement “relied on false representations”. So began another ongoing battle, with the taxman demanding payment of a bill estimated at around £1bn.
This week’s case was brought last summer and stemmed from a meeting between Ecclestone and HMRC in the summer of 2015 at the offices of the businessman’s tax advisers, Alvarez & Marsal. Asked whether he was connected as a settlor or beneficiary to any other trusts outside the UK, he replied: “No”.
“That was a lie,” Judge Bryan said in his sentencing speech on Thursday, adding that Ecclestone was actually linked to two trust structures and a Singapore bank account containing “very large” funds.
Nimesh Shah, chief executive of tax advisory firm Blick Rothenberg, said the size of the settlement was largely the result of rule changes that took effect in 2016 to make the penalties for not declaring overseas assets “very severe.” ”.
“This case has been going on for many years. If it had been resolved earlier, the fine would have been much lower,” he said. “The tax world has changed. HMRC have been slowly turning things around. I think at some point they’re going to want to use this to say they won’t tolerate offshore tax avoidance, and we’re going to get it.”
Ecclestone is also no stranger to the inside of the courtroom. One of the triggers for HMRC’s investigation was the criminal prosecution in Germany of Gerhard Gribkowsky, the former chief risk officer of German bank BayernLB, who was once a major shareholder in F1.
In the German case, Ecclestone is accused of paying Gribkoski, who was jailed for eight years in 2012, to secure the sale of F1 to a party that would allow him to continue running the sport. Ecclestone, who faces 10 years in prison in a German court for bribery, insisted the payment was a form of extortion. Under German law, criminal cases can be resolved with a fine but not admission of guilt. After paying 100 million Dollars later, Ecclestone was free.
The son of a Suffolk fisherman and a housewife, Ecclestone left school at 16 and later became a successful used car salesman. After briefly trying his luck as a racing driver, he bought Brabham Racing and began a partnership with F1, transforming it from a hobby for wealthy car enthusiasts into a global sports business now worth billions . His own fortune soared. Forbes estimates the Ecclestone family’s net worth at $2.9 billion.
Industry insiders particularly credit him with spotting F1’s broadcasting and sponsorship opportunities earlier than many others in the sport. During his tenure, he came into contact with a number of presidents and prime ministers as he sought to bring F1 to new markets.
He has developed a special affection for Vladimir Putin, whom he described as a “first-rate man” during a lunch with the Financial Times in 2017. Months after Russia invaded Ukraine, Ecclestone said he would still “take a bullet” for the Russian president.
After running F1 for nearly 40 years, US group Liberty Media acquired F1 from private equity firm CVC Capital Partners for $8 billion in 2016, with Ecclestone resigning as chief executive shortly after.
After Thursday’s hearing, Ecclestone chose not to hide. Instead, he walked the short distance from the court along the River Thames in central London to Borough Market, where he was discovered shortly after queuing for donuts.
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