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Thursday, June 28, 2012

Mercedes will quit Formula 1 if Bernie's charged for Bribery

What would the loss of Mercedes mean for Formula 1 as a sport?

On foot of yesterday's 8.5 year Gaol term handed down to Gerhard Gribkowsky, convicted of a breach of trust, tax evasion and bribery of around £28 Million from Bernie Ecclestone, Mercedes participation in Formula 1 has once again come under threat.

The German Marque is governed by strict statutes for good corporate governance which Handelsblatt, the German newspaper, has quoted as including "Daimler will not tolerate unethical or corrupt practices by employees or by their business partners".  The paper quotes a Partner with Linklaters, a global law firm with links to F1, who says that "Ecclestone's bribery payments would fall under this company guideline"

F1SA is reporting that Bild quoted a Mercedes spokesperson as saying "we welcome the evaluation of the recent allegations in Formula One and now await the clarification of the authorities".

The prosecuting attorney in the Gribkowsky case, in wrapping up stated that Ecclestone was "not the victim of extortion but the accomplice in an act of bribery".

To date Bernie has not been charged with any wrongdoing.

  With the new 1.6 turbo engine due to be used in the 2013 cars the loss of Mercedes, along with Cosworth who probably can't afford the cost of design and production, would leave only two engine suppliers in the Paddock, Renault/Infiniti and Ferrari, to service 12 teams, Could they do it? Probably, but I'd be afraid that the prestige of the sporting phenomenon would be severely compromised, the sport would be moving towards a single engine formula which will reduce its credibility as being the cutting edge of motor-racing.

Single engine formulae tend to promote stagnation on the mechanical side with all gains within the formulae centring around aero and electrical innovation.  It would significantly impact on the sports appeal apart from the fact that one team would be lost while McLaren and Force India would have no engine supplier for 2013.

Now McLaren are rumoured to be building their own engine and these news stories may push them to redouble their efforts on this side, but officially they have committed themselves to Mercedes for at least 2013, which would give the impression that they are not finished development.

No Mercedes, No Cosworth would leave at least four teams without engines, five, if Mercedes were to sell their works team.  Of course there are mutterings about Honda and VW/Audi, coming into the sport now that the 2013 engine will be more relevant to their core business of making road cars but the Mercedes rumour is a bit more concrete, a bit more tangible and quite likely, particularly given the recent murmurings coming from HQ in relation to the distribution of power and money on foot of any flotation.

Of course, not to have a go at Linklaters, but McLaren and Williams did sue them for negligence in 2004 along with B&M claiming that the firms had been negligent in negotiating and drafting an agreement with Bernie.

They said the negligent advice meant that in 1999 the teams missed out on proceeds from the £812 million sale of a stake in SLEC Holding, the parent company of Formula One Holdings. Under the Concorde Agreement all the F1 teams are entitled to a share of the revenue arising from the sale of commercial rights.

The upshot of that action was that both B&M and Linklaters settled with the two teams out of court.

At that time McLaren were the only team to run Mercedes engines.

Perhaps the Linklater comments are the "dish best served cold". What do you think?