SFO Targets F1 Supremo Ecclestone

The U.K. Serious Fraud Office may investigate bribery allegations against Formula One boss Bernie Ecclestone, left, according to reports from Reuters and others.

Ecclestone, 81, testified in a German court last week that he 'paid former BayernLB banker Gerhard Gribkowsky to stay quiet and keep tax authorities at bay while acquiring Formula One rights five years ago,' Reuters said.

F1 is the top class of single-seater car racing sanctioned by the Fédération Internationale de l'Automobile.

Gribkowsky is on trial in Germany for taking $44 million from Ecclestone. In return, prosecutors charge, the banker made sure BayernLB’s F1 stake went to Ecclsestone and his companies.

U.K. Attorney General Dominic Grieve has confirmed the SFO's involvement, according to the Financial Times.

'The SFO is aware of the allegations against Mr. Ecclestone and is liaising with the authorities in Germany to ascertain if there is a case to answer in the U.K.,' a Serious Fraud Office spokesman told the Financial Times.

The Telegraph reported today that Ecclestone, a U.K. citizen, told authorities the German banker extorted the payment.

Ecclestone and his family trust, Bambino Holdings, have admitted making the payments but claim they were blackmailed by Gribkowsky who threatened to go to HM Revenue & Customs with evidence that Ecclestone was more involved in the running of Bambino than he was allowed under the law. Neither Ecclestone nor Mullens, until recently a director of Bambino, have been charged with any crime.

Ecclestone testified in Gribkowsky's trial that a tax investigation into Formula One could have been 'a disaster' for him and his companies that could have cost him more than £2 billion pounds, Reuters said.

In 2010, F1 reported revenue of $1.6 billion, according to Autoweek.

Does Graft Predict Debt Woes?

This may be cheap science. But take a look at the seventeen Eurozone countries according to their rank on the 2010 corruption perception index.

Greece is perceived as the most corrupt country in the Eurozone. Its debt crisis has threatened the EU for months, hammered the international banking sector, and roiled world stock markets.

Just when the Greek debt problem was looking better, attention shifted to Italy. Predictably, it ranks next to last of the Eurozone countries according to the CPI.

Then come Slovakia and Malta -- not yet major economies -- followed by Spain and Portugal. Both are mentioned as the next potential sovereign-debt trouble spots.

Ireland breaks the mold, ranking near the top on the CPI but being a Eurozone laggard.

We're not making too much of this. And it doesn't mean clean countries can't run into debt problems. But perhaps there's a link between regimes perceived as corrupt and a messy handling of their fiscal affairs.

Here's the list of Eurozone countries with their CPI rank in parentheses:

1.  Finland (4)

2.  The Netherlands (7)

3.  Luxembourg (11)

4.  Ireland (14)

5.  Germany (15)

6.  Austria (15)

7.  Belgium (22)

8.  France (25)

9.  Estonia (26)

10.  Slovenia (27)

11.  Cyprus (28)

12.  Spain (30)

13.  Portugal (32)

14.  Malta (37)

15.  Slovakia (59)

16.  Italy (67)

17.  Greece (78)

By the way, Turkey -- a Eurozone wannabe -- ranks 56 on the CPI. That's near the bottom of the list of current members.

BRIC Companies Rank Low On New TI Index

Transparency International yesterday released its 2011 Bribe Payers Index. It’s the fifth version of the index and the first update since 2008.

It ranks 28 of the world’s largest economies, TI said, ‘according to the perceived likelihood of companies from these countries to pay bribes abroad.’

The report is based on a survey of business executives. The countries ranked, TI said, cover all regions of the world and represent almost 80 percent of the total world outflow of goods, services, and investments.

It includes perceptions of public bribery and for the first time private ('business to business') bribery.

The top-ranked countries are the Netherlands and Switzerland, tied in first place. Belgium, Germany, and Japan round out the top five.

Companies from the BRIC economies are led by Brazil at 14. Russia ranked last overall at 28, India at 19, and China at 27.

The UAE, Indonesia, and Mexico complete the bottom five spots.

TI’s 2011 bribe payers index is here.

H-P, Mark Hurd And The FCPA

Will new investigations by the SEC into the departure of Hewlett Packard's former CEO converge with ongoing probes into the company's overseas sales practices?

Mark Hurd headed H-P for five years until he left the company in August. Bloomberg said today the "SEC is checking whether Hurd passed information about H-P’s $13.9 billion acquisition of technology-consulting company Electronic Data Systems Corp. to a former H-P event hostess in 2008, before the deal was announced."

She alleged in a letter to H-P he had sexually harassed her between 2007 and 2009. Her letter, according to the Wall Street Journal, "also alleged Mr. Hurd told her in March 2008 of H-P's still-secret plan to acquire EDS."

The WSJ said the SEC is also looking at Hurd's use of corporate expenses in his dealings with the event hostess.

Hurd is now co-president of Oracle.

A few months before he left H-P, the company self-reported to the SEC and DOJ possible corrupt payments in Europe. It said investigations in Germany related to transactions in Russia from 2001 to 2006. After Hurd left, H-P publicly disclosed DOJ and SEC investigations of potential compliance problems in Russia, Austria, Serbia, the Netherlands, and perhaps other countries. It said the U.S. enforcement agencies had requested documents dating back to 2000.

In May this year, a contributor to the FCPA Blog questioned the timing of H-P's self-reporting and public disclosures. H-P, he said, "apparently first learned of a bribery and corruption investigation when it was served with document requests by German authorities in December 2009 -- around the same time that three former and current H-P employees were arrested by the same German authorities for allegedly paying bribes to make sales in Russia. As reported by the Wall Street Journal, HP did not report this investigation to the DOJ and SEC until April 2010 . . ."

The company's first public-record filing about the bribery and corruption investigation was in September this year.

None of the reports have linked Hurd to any potential FCPA problems at H-P. His tenure at the company began at least five years after some of the incidents under investigation.

The SEC and DOJ haven't commented on their investigations.

A spokesman for Hurd told the WSJ: “Mark acted properly in all respects. It is understandable that the SEC is looking into the events surrounding Mark’s departure, which was followed by a precipitous drop in the value of H-P’s stock.”

H-P said it is cooperating in the investigations.

Croatia's Clean-Up

Ivo Sanader, ex-PM of Croatia. Photo credit to NatoCroatia's former prime minister, Ivo Sanader, was arrested in Austria on Friday. He's wanted back home to face a corruption investigation, according to a report from the BBC.

Earlier this year, Germany's Daimler AG settled FCPA-related charges with the DOJ and SEC for $185 million. A subsidiary, Daimler Export and Trade Finance GmbH, admitted paying about $6 million in bribes to sell fire trucks in Croatia. The payments -- from 2002 through 2008 -- went to officials in the Ministry of the Interior and employees at IM Metal, a government-linked company.

In September, Sanader's former deputy prime minister, Damir Polančec, was charged in Croatia with embezzlement and money laundering. He's denied the charges.

A Wikileaks story in the Guardian last week quoted Croatia's chief prosecutor as telling U.S. embassy officials in January that Sanader, who resigned as PM last year and is now an independent MP, was the target of ongoing corruption investigations.

"Sanader has possible involvement in several cases," the cable said, "but the one in which prosecutors have gathered the most evidence involves illegal mediation between his friends and Hypo Alpe Adria Bank Group of Austria. The Hypo Bank case indicates that Sanader allegedly arranged a loan of 4m Deutshce Markloan for his neighbour, Miroslav Kutle, in the 1990's and received an 800,000 DM kickback from Kutle in return."

Sanader fled Croatia for Austria after the leaked cable was published last week. He was arrested a day later on an Austrian motorway. The Croatian prosecutor's office has stripped him of immunity.