Wednesday 22 February 2017 4:31 pm

Formula One: MEP hits back at governing body claims of malicious intent

The MEP championing change in Formula One has hit back at claims by the sport's governing body that her cause is “inaccurately informed or made maliciously”.

In an open letter Anneliese Dodds highlighted a conflict of interest in Formula One's regulator, the FIA, allegedly profiting from signing off on the sale of Formula One to Liberty Media.

One per cent stake

"As I see it, there are two key instances where such a conflict of interest could have arisen. The first is the $5m ‘signing bonus’ that the FIA received from Formula One during the establishment of the sport’s ‘Strategy Group’.

"The second and more concerning instance, relates to the FIA’s purchase of a one per cent stake in Formula One for a cut-price deal of $458,197. As that stake was worth $80m only four years later, I feel that either Formula One seriously undervalue their business, or some other factor was involved."

Last week, the European Parliament backed a calls by Dodds for an investigation into "anti-competitive practices" in the sport. This together with the Dodds' letter to the Times newspaper prompted the FIA to clarify its position in relation to the sale of Formula One to Liberty Media.

The regulator owned a one per cent shareholding in the firm and its sale was "dragged along" with other shareholders once all the shares by CVC were sold to Liberty Media. This occurred at the end of January and culminated in Bernie Ecclestone's being ousted by the sport's new owners.

FIA said in a press release last week: "There is no conflict of interest on the part of the FIA with regard to its approval of the change of control of the CRH [the holding company of the Commercial Rights Holder of the FIA Formula One World Championship] which has been approved by the World Motor Sport Council taking into consideration exclusively the terms of the existing agreements between the CRH and the FIA and the best interests of the championship."

Barclays

Dodds today responded by drawing a comparison between what the FIA had done and a hypothetical example using the UK's financial regulator and one of Britain's leading lenders. She said:

As an MEP who works closely in scrutinising the financial services sector, if I saw the FCA take a one per cent stake in Barclays, I would be incredibly alarmed.

Any decision that the FCA took that could have even an indirect impact on Barclays would affect its share price and therefore any current or future financial gain from that stake.

I don’t understand how these concerns are ‘malicious’ and I feel they should be treated seriously, as does the European Parliament.

Open Letter to the FIA: Full text

On Tuesday of last week The Times reported on my concerns about Formula 1 racing (‘F1 facing investigation into “anti-competitive behaviour”’, 14 February). This seems to have prompted the sport’s regulator, the FIA, to issue a press release in which they seek to rebut comments which they describe as “inaccurately informed or made maliciously”.

I would like to clarify that not all of my wider concerns in the governance of Formula One are related to the regulator. Neither am I accusing any individual or organisation of wrongdoing. I am articulating the concerns of my constituents in the South East, the businesses based there and the highly skilled workers who are losing their jobs due to what they see as inherent faults in a much loved sport and industry. Last month, Manor Racing became the latest team in my constituency to collapse.

It is my job as their elected representative to ask questions on their behalf.

My concerns in relation to Formula One’s regulator, The FIA, are purely focused on the conflicts of interest that can arise when the regulator of a particular industry also has a financial stake in that same industry. In that situation, the prospect of the regulator making a profit from developments within an industry that it is supposed to be regulating is something which requires close attention.

As I see it, there are two key instances where such a conflict of interest could have arisen. The first is the $5m ‘signing bonus’ that the FIA received from Formula One during the establishment of the sport’s ‘Strategy Group’. The second and more concerning instance, relates to the FIA’s purchase of a 1% stake in Formula One for a cut-price deal of $458,197.34. As that stake was worth $80m only four years later, I feel that either Formula One seriously undervalue their business, or some other factor was involved.

As an MEP who works closely in scrutinising the financial services sector, if I saw the Financial Conduct Authority take a 1% stake in Barclays, I would be incredibly alarmed. Any decision that the FCA took that could have even an indirect impact on Barclays would affect its share price and therefore any current or future financial gain from that stake.

I don’t understand how these concerns are ‘malicious’ and I feel they should be treated seriously, as does the European Parliament.

While I appreciate the FIA’s attempt to clarify its position, I would welcome a more detailed outline of the reasoning behind its acceptance of these payments. I am certain that any transparency the FIA can provide on the European Parliament’s concerns would help to ease concerns shared by fans of the sport.

Yours faithfully,

Anneliese Dodds MEP