Features - News Feature
AUGUST 1, 1999
Formula 1 and crime
BY JOE SAWARD
There is no evidence to suggest that any of these stories are true and they are all linked to an article which was published in The Sunday Times newspaper on the weekend of the British Grand Prix.
The story - which was on the front page of the newspaper - said that police were investigating Formula 1 after a tip-off which suggested that Grand Prix teams were transport drugs. The police had found nothing during their 18 month investigation and had been given the full cooperation of F1 boss Bernie Ecclestone. Some F1 equipment had been searched.
The story had no facts beyond that and was simply a sensationalist article designed to help sell newspapers on the weekend when interest in F1 is at its highest point of the year in Britain. Such is the way of the newspaper business in Britain these days.
Ecclestone is understood to have told teams that he will not except anything which damages the image of the sport. Formula 1 has a good clean image which has taken many years to build up and he knows that one scandal - such as the doping scandal on the 1998 Tour de France - can do terrible damage to a sport. Ecclestone says that for this reason F1 will not go to Russia because the country has the image of being run by gangsters.
Image is everything.
Tip-offs about drug smuggling are not new in F1. Often this is done for malicious reasons and, in the early 1990s, the Benetton trucks and motorhomes were constantly being searched by police and customs officers because someone had tipped off the authorities. Nothing was ever found.
Police have to check all the tip-offs they receive and it is no surprise that they should be particularly interested in a sport which has trucks crossing borders somewhere in Europe every day. One should not forget that at each Grand Prix there are something in the region of 100 40ft trucks: these belong to the teams (who have three or four trucks each), Ecclestone's TV facility (which has 20 trucks) , Bridgestone (which normally has seven trucks at a race) plus other TV companies, the paddock club, caterers, the FIA and so on. In between the races there is a constant flow of trucks going to and from tests around Europe. It is inevitable that from time to time some of these will be stopped and searched but despite thousands of borders crossed there has been nothing found.
One reason that there are suspicions about F1 and drugs is because other motor racing championships have in the past been used by drug dealers. In the early 1980s, for example, the IMSA sportscar championship in the United States fell victim to a series of drug scandals, involving leading drivers. These included the 1982 and 1984 IMSA Champions John Paul Jr and Randy Lanier and the Whittington Brothers. Paul went to in jail for several years for racketeering, while his father John Paul Sr was given a 25-year sentence after pleading guilty to importing marijuana, tax evasion, possession of a false passport and shooting a federal witness. He was on the run for several years and was eventually arrested in Geneva, Switzerland, by FBI officers.
Lanier was another man to try to make a run from justice. He was convicted of importing and distributing marijuana and was due to be sentenced when he disappeared. He was arrested eight months later in Puerto Rico. He eventually went to jail for life for his involvement in a huge cocaine smuggling ring.
This was followed in 1992 by a scandal in Britain when Vic Lee, the boss of one of the top British Touring Car Championship teams was arrested after 40kg of cocaine were found in one of his trucks when it returned from a test at Zandvoort in Holland. Lee went to jail for 12 years.
One reason for the drug dealing was the need for teams to find the money needed to race. Drugs were a commodity which could be bought and sold with big profits.
Formula 1 has largely escaped the scourge of drug dealing although there was a minor drug smuggling scandal back in the 1970s which resulted in a lesser known member of the F1 community going to jail after being arrested in possession of drugs in London. He did not help his cause by escaping from a police raid by jumping out of a window and then driving off, hitting a policeman and breaking the officer's leg. The man in question served his jail sentence and has not been back in F1.
That was a long time ago and once tobacco money began to arrive in large amounts in F1 there was no need for the kind of money that illegal drugs could produce. F1 was being financed by a legal drug...
As to the use of drugs in the sport, there is no doubt that wherever there is a lot of money and people with time on their hands there tends to be a drug scene. This is not obviously the case at Grands Prix where most people involved are working flat out throughout a race weekend. In between races there are some people with time on their hands and it may be a different story. There was a hint of this last December when French police arrested seven people in the Draguignan area of Provence and charged them with supplying cocaine to the jet set on the Cote d'Azur. One of those arrested was a fashion model who told police that she had supplied the drug to a Formula 1 driver.
No names were given and to date no case has come to court.
Racing drivers - particularly the successful ones - have tended to find in recent years that fitness is a key factor in success and so they have avoided alcohol and drugs. They live on strict diets and, according to French sports medicine expert Pierre Baleydier, there are currently no drugs which can improve the performance of F1 drivers.
"Is there a drug that would make an F1 driver go faster?" said Baleydier recently. "As far as I know no such thing exists. Anabolic steriods, growth hormones and so on are of no interest in F1: what good is increasing the physical power of a driver and paying for it with excess weight? Amphetamines push back the threshold of pain and fatigue. That is true in more demanding sports than F1 where the effort lasts more than 90 minutes, but amphetamines create euphoria and that is to the detriment of clear-thinking and that does not seem like a good idea to me in F1. There are downsides too with beta-blockers, which reduce stress . They slow down the reflexes. Given the specific things demanded from a racing driver it seems to me that F1 is protected from the drugs plague and so spared from it."
The FIA does occasional random drug tests and only once has anything been found. That was back in 1995 when both Rubens Barrichello and Max Papis tested positive to substances which appear on the International Olympic Committee's list of banned drugs. Both men were taking nasal decongestants for colds. The drug was ephedrine and F1 doctor Professor Sid Watkins explained that ephedrine had no effect whatsoever on a driver's ability to perform and suggested that it was probably better if F1 did not use the same list of banned drugs as the International Olympic Committee as it was not specifically designed for F1.
The need for money has been eased in recent years not only by tobacco income but also by large increases in television income. In addition as F1 has become an investment opportunity so big financial institutions have started to become involved in F1. And that means that F1 has entered a corporate phase and left behind the days when the sport was peopled by colorful entrepreneurs - who were willing to cut corners to achieve their goals. In the early 1980s there were several examples of small businesses which became F1 sponsors simply to get money out of the business to avoid taxation. This was easy as all that was necessary were a few false invoices from a willing racing team. The taxmen in the country concerned saw the money going to F1 but the teams only saw half of the money. No charges were ever levelled in F1 but there were a few investigations, notably in Italy.
The danger as the sport grew - leaving behind small money laundering operations such as the one just mentioned - was that organized crime would try to get a hold in the sport to launder large amounts of illegal money. Money-laundering is a vast worldwide industry which is constantly looking for new schemes to "wash" what is known as "dirty money". This is illegal income from drugs, prostitution, protection rackets and so on. Money laundering was invented in the 1920s by Al Capone's accountant Meyer Lansky. In the old days the Mafia used slot machines, casinos, shops and clothing companies - businesses which dealt with a lot of cash - to launder its money. The cash was spent on running the business - leaving no trace - but the books were balanced by the payment of cheques to companies which had issued false invoices. These cheques were banked by the second company and could then be transferred to offshore accounts or through other fake companies until it got back to the owners of the original business.
Has it happened in F1? No-one has been caught doing it, but the potential for such activities exists because F1 uses up a great deal of money and all that is needed is companies willing to issue false invoices. It has to be said, however, that as financial institutions become more involved in the sport, so does the scrutiny of the finances of the teams and so the opportunities for the money launderers are reducing all the time.
There have been a lot of F1 team bosses over the years who have run into trouble for allegedly fraudulent behavior but once again this seems to have been part of the entrepreneurial phase through which the sport passed in the late 1980s and early 1990s. There have not been many cases recently but at the time there seemed to be a constant flow of F1 folk through the law courts. Some even went to jail.
One of the earliest cases was related to Team Lotus and there is little doubt that if Lotus founder Colin Chapman had not died he would have ended up in jail for his part in the De Lorean Car company scandal. American John Delorean established a car factory in Ulster, using a large amount of British government money. De Lorean agreed to pay Lotus to develop the cars for him and $15m was sent to Lotus. It never arrived (although another payment for the same amount did turn up). The original money went to De Lorean, Chapman and Fred Bushell. De Lorean fled when investigations began, Chapman died and Bushell was eventually arrested and found guilty of receiving $600,000 of the money. He was jailed for three years at the Belfast Crown Court and the judge said that if Chapman and De Lorean had been there they would have each received 10 year sentences for "an outrageous and massive fraud".
Another man to go to jail was British businessman Ted Ball, who financed both the Brabham and Lotus teams in the early 1990s. He received three years in prison after admitting that he had defrauded banks of millions of dollars in order to fund his passion for the sport. Ball and his partner doctored the books of the public company he ran - called Landhurst Leasings - which crashed in 1992 with $75m missing.
Back in the mid 1980s Renault Sport boss Gerard Toth went to prison for fraud after he diverted money being paid by Tyrrell to Renault Sport for a supply of Renault turbo engines into his own Swiss bank account.
Jean-Pierre Van Rossem, the eccentric Belgian who the money from his Moneytron investment scheme to fund the Onyx team in 1989, ended up with a five year jail sentence for fraud and was ordered to repay $30m to his customers.
Several other team bosses were arrested for financial irregularities, including Andrea Sassetti, the Italian shoemaker who ran the disastrous Andrea Moda Formula and was arrested in the paddock at Spa. There was also Joachim Luhti, the Swiss financier who owned Brabham for a brief period. And, of course, Frenchman Cyril de Rouvre - the boss of Ligier in 1993 - who spent several months in jail as French magistrates investigated his financial dealings.
One of the least known yet most remarkable stories of the era was that of Gerard Larrousse's partner Rainer Walldorf who was briefly involved in F1 in 1992. The 50-year-old German was actually called Klaus Walz and was wanted by the police in several countries in connection with four different - and rather nasty - murders. F1 only discovered this when news came from France that Walldorf's house had been raided early one morning by a posse of French police. He had taken his arrest calmly and asked if he might collect something important from the desk in his study. He rummaged around until he found the hand grenade he was looking for and then gave the assembled policemen a choice: they could all blow up together there and then, or he could take the police chief hostage and handcuff everyone else to the available furniture. The policemen had a vote and were manacled to the fixtures and fittings while Walz and the police chief went off in a car into the country. On the way he telephoned an accomplice and they met in the hills, leaving the police chief handcuffed to the steering wheel of his car, and throwing the hand grenade into a nearby chicken coop.
A month later Walz was tracked down to a hotel in Germany where, after being surrounded for nine hours by German police, he was killed in a gun battle...
Murder is unusual but F1 did have a murder back in 1989 when another of Gerard Larrousse's partners - a Frenchman called Didier Calmels - shot his wife, apparently because she was having a love affair with someone else. Calmels, who looked after the team's commercial operations, went to jail. He has since been released.
Even more bizarre, perhaps, was the case of Stewart Grand Prix employee Richard Tomlinson, who was arrested a couple of years ago for offences under the Official Secrets Act. Tomlinson had been a member of the Secret Intelligence Service before he joined Stewart and had been dismissed. He was unhappy about the decision and decided to write a book about his activities as a secret agent - which he was prohibited from doing...
Bernie Ecclestone's $1.5m donation to the British Labour Party caused an uproar in 1997 as it came just before the party decided to alter its attitude to tobacco advertising. There were claims that it was a bribe but these were dismissed by Ecclestone and the Labour Party. Ecclestone was eventually given his money back - but the Labour attitude to tobacco remained, suggesting that the money was purely a political donation rather than a bribe.
There is no doubt that F1 has attracted some cases of bribery over the years, not least in relation to races in some countries where local politicians and officials have demanded payment in order for the Grands Prix to go ahead. This usually involves mayors, chiefs of police and such people. We have heard of one race which had to be cancelled because the bribes demanded were so big that the race was no longer profitable!
Dealing with governments means that there are inevitably clashes between F1 and governments over whether or not laws are justified. This is currently happening over the question of unfair competition in the European Union, over tobacco advertising in various countries and over the question of the manslaughter laws in Italy, where manslaughter charges can result from accidents - such as the one which killed Ayrton Senna. The FIA is fighting for the laws to be changed.
And if you think that this is a modern concept it is worth noting that there were manslaughter charges against Alberto Ascari in 1951, Enzo Ferrari and the Engelbert tyre company in 1957, and against Team Lotus in 1970 and 1978 following the deaths of Jochen Rindt and Ronnie Peterson.
So is there lots of criminal activity in F1 these days?
It is always possible but, in general terms, the sport is cleaner than it has ever been...