French authorities look into FIA’s stake in Formula One

US$4.4 billion acquisition of global motorsport series investigated.

French authorities look into FIA’s stake in Formula One

France's National Financial Office (PNF) is believed to be investigating the role played by the International Automobile Federation (FIA) - motorsport’s global governing body - in Liberty Media’s US$4.4 billion acquisition of Formula One.

According to The New York Times, investigators from France’s anti-corruption department want to discover whether or not the Paris-headquartered FIA had a conflict of interest when it agreed to clear the 2016 sale of Formula One to the US-based cable conglomerate, owned by John C Malone. 

Accounting for debt, the takeover of the elite open-wheel series amounts to a total of over US$8 billion, which makes it one of the largest financial transactions in the history of sport.

PNF prosecutors are thought to be looking into the case after the UK’s Serious Fraud Office (SFO) began a pre-investigation into the deal following a tip-off from Damian Collins, a member of the British parliament.

The investigation centres on a Concorde Implementation Agreement (CIA), settled upon in 2013, whereby the FIA would receive a one-off lump sum payment from the Formula One Group. 

The CIA resulted in a new governance structure for Formula One and redefined certain conditions, such as a promise that the FIA would be properly remunerated. A US$5 million payment was reportedly made to the FIA for entering into an agreement with the teams and Formula One Group. The contract also granted the FIA a one per cent stake in the Formula One Group for the bargain price of US$460,000. 

The FIA’s approval was then needed for Liberty’s takeover of the company and it made a US$79.5m profit by cashing in its stake. The FIA denies any wrongdoing and says the fee was a payment in turn for its regulatory role in the sport, not a bribe. 

‘We are entirely confident that any investigation would find that the FIA has acted appropriately at all times, and we stand ready and willing to cooperate with any enquiries should any investigation be commenced or clarification sought by the appropriate authorities,’ the federation said in a statement.