British politician says 2013 deal between FIA, Formula One Group amounted to bribery
A suggestion aired on British TV that the Serious Fraud Office might look into a deal done in 2013 between the Formula One Group and the FIA has caused a minor fuss in the F1 world this weekend. A British Member of Parliament would like the police to investigate the Concorde Implementation Agreement.
There is no suggestion that they will.
Damian Collins, the British MP who chairs the Culture, Media and Sport Committee, is asking the Serious Fraud Office to look at the deal to assess possible conflict of interest, even to the level of classifying it as a bribe between the FIA and the Formula One Group. The Bribery Act defines bribery as “giving or receiving a financial or other advantage in connection with the improper performance of a position of trust, or a function that is expected to be performed impartially or in good faith.”
The deal struck in 2013 involved the FIA getting a $5 million signing bonus and buying an option to purchase a 1 percent share in the top holding company of the Formula One Group for $460,000. The estimated market value of the shares was $70 million. The problem with the bribery argument is that the FIA owns the commercial rights that give the shares their value. The rights had been leased to the Formula One Group, so the deal was simply a way for the federation to extract more value from an asset that it already owns.
The shares involved had no dividends and had to be cashed in when the Formula One Group was sold. It was a creative way to ensure the long-term future of the federation at a time when the sale was not in any way certain.
The $5 million signing fee was a similar story, but helped the FIA with cash, as opposed to being a long-term investment.
Both elements of the deal were cleared by the FIA Senate, which oversees the management and finances of the federation. It is made up of 16 members, including the president of the senate, American Nick Craw. The rest of the membership is composed specifically to ensure a balanced representation of both arms of the FIA.
The FIA is saying nothing beyond referring back to a statement made in February when it dismissed stories about an EU investigation of the deal, saying that the stories were “clearly inaccurately informed or made maliciously.”
The story is seen by FIA figures as being an attempt to stir up trouble, orchestrated by those who don’t like the takeover of the Formula One Group by Liberty Media, and who are hoping to influence the FIA elections at the end of the year.
The bribery laws have caused a great deal of trouble already in Formula 1 in relation to hospitality, which is now much more restricted than used to be the case and has caused the Formula One Group to refocus its VIP packages .