'Germany's Biggest Case Of Corruption'

Lila Shapiro HuffPost Reporting

Gerhard Gribkowsky In Jail Under Suspicion Of Bribery, Tax Fraud In What Could Be 'Germany's Biggest Case Of Corruption'

The Huffington Post, 03/ 3/11

In January, Gerhard Gribkowsky, the former risk manager of the Bavarian regional public-sector bank BayernLB, was taken into custody under suspicion of bribery, tax fraud and breach of trust toward his former employer -- in what the German paper Sueddeutsche Zeitung is saying "could become Germany's biggest case of corruption."

The investigation stems from an alleged kickback Gribkowsky took for engineering the sale of the bank's stake in Formula One -- a popular motor sport -- to London based private equity firm CVC Capital Partners Ltd.

The grounds for the investigation, according to Die Zeit, are the unclear origins of Gribkowsky's $50 million fortune which he has allegedly placed in a private Austrian trust called Sunshine.

Bloomberg provides a rundown of the tangled web surrounding the investigation into Gribkowsky and the sale of BayernLB's Formula One stake to CVC:

That mystery has thrown a spotlight on the partnership between 80-year-old Formula One Management Ltd. Chief Executive Officer Bernie Ecclestone, a fixture of London's tabloids, and the company's buyer, CVC Capital Partners Ltd., one of Europe's largest and most-private buyout firms. The case is also reviving the anger of media mogul Leo Kirch, who says the racing company he once owned was sold on the cheap. Meanwhile, Gribkowsky sits in a German prison that held Adolf Hitler.

This is not the first time Gribkowsky has been enmeshed in controversy. As the Telegraph reports:

BayernLB's purchase of 50 per cent of the Austrian bank Hypo Group Alpe Adria for €1.63 billion in 2007, and the subsequent re-sale for one euro and nationalisation to avoid a collapse, led to his questioning by prosecutors last year.

BayernLB reported a net loss in 2008 of €5.1 billion, mostly lost in disastrous investments on the American sub-prime mortgage market.

BayernLB is seeking damages against Gribkowsky for his role in the scandal-ridden acquisition of HGAA. BayernLB lost $5.1 billion in the deal and had to be backed with $13.8 billion in tax money by the state government, according to Die Zeit.