Is the Bernie Ecclestone ruling a formula for injustice?

The $100m settlement between German prosecutors and Formula One paterfamilias Bernie Ecclestone in the Munich District Court prompted an outpouring of cynicism and dismay. Unfortunately much of the reaction fixated on the octogenarian buying his way out of a conviction for bribery and ignored the mechanics of the German law.

Charles Kuhn hickman rose
Charles Kuhn

Ecclestone’s trial was ended under Section 153a of the German Criminal Procedure Code, which permits the prosecution to conditionally suspend proceedings in exchange for payment to the state or a charitable organisation. Prosecutors have made frequent use of Section 153a in serious white collar crime cases since it was enacted in 1975. It was apparently used in over 200,000 cases across Germany in 2012, with 154,024 cases dropped in exchange for a payment.

Far from representing a “rich man’s charter” the provision establishes a regime where the settlement amount is proportionate to the defendant’s means. As Ecclestone’s financial reserves have been estimated at $4.2bn it is unsurprising his settlement is apparently the largest since the section was introduced nearly forty years ago.

Much was made of the fact that Judge Peter Noll had previously sentenced banker Gerhard Gribkowsky to an 8.5 year custodial sentence in 2012 following a trial where Ecclestone admitted paying Gribkowsky £27m. Gribkowsky’s sentence related to receiving corrupt payments, breach of trust and tax evasion and was aggravated by the fact Gribkowsky worked for a state-owned bank, rendering him a public official. Ecclestone contended the payment was the result of Gribkowsky blackmailing him rather than a bribe and that he was unaware of Gribkowsky’s public office.

When it came to Ecclestone’s trial, Judge Noll indicated the suspicion of bribery against Ecclestone could generally not be backed up by evidence. With the judge apparently suggesting a conviction was far from certain and proceedings likely to drag on for some time, it is difficult to substantiate the gripes about Ecclestone’s settlement, which yielded millions for the Bavarian treasury and a further $1m for a German children’s hospice charity.

Deal-making is a common feature of German litigation. In contrast to the English adversarial system, German courts adhere to an inquisitorial system that allows judges to become heavily involved in a trial and discuss the evidence more freely with the prosecution and defence. German judges typically welcome the opportunity for parties to strike a deal as it allows them to dispense with the full length of a trial and produce a much shorter reasoned judgment.

Such has been the willingness of participants to hammer out deals behind the scenes that the German government introduced a new act in 2009 to create a more formal structure and ensure negotiations were recorded in detail. In contrast, UK prosecutors are often forced to “death march” cases until completion, with jurors deciding cases in complete isolation and only allowed to pass occasional notes to the judge.

UK legislators have strived to make plea bargaining more accessible with the introduction of SOCPAs and conditional cautions, with limited success. Earlier this year, Deferred Prosecution Agreements (DPAs) were introduced to the UK to allow companies to reach a judicially supervised agreement with prosecutors to suspend a prosecution if specific conditions were fulfilled. DPAs ease the burden on courts and enable cases to be resolved without resorting to prosecution, functional similarities to Section 153a of the German Code.

However they are not available to individuals. Once launched, high profile white-collar cases are extremely difficult to dispose of before English criminal courts and often result in lengthy trials. The UK traders who have been charged with alleged Libor infractions face drawn-out proceedings. Contrastingly, it is likely that Section 153a would play a role if any indictments appeared for financial rate rigging within Germany.

Far from being a symptom of a malfunctioning judicial system, Ecclestone’s settlement was a pragmatic decision that avoided prolonging an expensive trial when it was apparent the prosecution was struggling to surmount the evidentiary burden. Having a similar provision available under English law may have benefited the Serious Fraud Office in some of their highly publicised failed prosecutions. The model of having a judge driving negotiations between parties should be closely considered rather than disparagingly dismissed.

Charles Kuhn and Christopher Honnery, respectively in-house criminal and regulatory barrister and legal writer at Hickman and Rose