The owner of Formula 1’s commercial, CVC Capital Partners, has launched an investigation into the circumstances that surrounded its takeover of the sport five years ago.
This has the potential to be one of the biggest stories in the sport this year – here’s why…
The follows merchant banker Gerhard Gribkowsky (pictured) being jailed on charges relating to his receipt of a $50 million payment, which sources in Germany allege was a kickback that originated from F1 boss Bernie Ecclestone.
Reports from Sky News claim CVC and its holding company, Delta Topco, have appointed auditors from Ernst+Young and lawyers from the Freshfields Bruckhaus Deringer firm to investigate the matter, with the probe focusing on “the circumstances surrounding the takeover of formula one back in 2006”.
Gribkowsky was one of the risk officers in Bayerische Landesbank, which was one of the sport’s shareholders before the sale occurred.
The reports also adds that the lawyers and auditors have been instructed to report back “within a matter of weeks”.
That’s right. Weeks.
CVC’s decision to not only launch an investigation, but also make public the knowledge of that investigation occurring is extremely interesting.
Typically, an organisation will only bring in independent external investigators when there is a strong smell of something rotten within it, and even then, it’s unusual to disclose that such an investigation is actually occurring.
Quite often, public knowledge of such investigations is both embarrassing and very bad for business, which leads one to think that there are definite motives behind CVC’s decision to publically confirm its investigation.
It would suggest that whatever embarrassment CVC may suffer is no longer its primary concern, perhaps indicating that other parties might be ready to release their own information that could do far more damage unless CVC acts first.
By launching its own investigation, it can them claim it was trying to address the issue in a sound and responsible business manner before any charges are laid, while it might also be hoping that the independent group of auditors and lawyers will be able to confirm that the entire organisation does not go down with these allegations of corruption – leaving them able to direct responsibility to a select few ‘rogue’ employees.
CVC is surely in a serious moment of damage control. This has every potential to be one of the most explosive stories of 2011.
[Original image via Seud Deutsche]