Biggest cost will be the disguntled board members who didn't want to own a team, they might gain more power.

My two thoughts


I can't believe Nick would have done something dodgy on purpose, seems something stupid or misunderstanding

Saying that

What the hell, they still expected to be paid the £80m even after all this was revealled, erm, doh, would have being better to save face and quietly let it drop.

I don't think so. The deal was worked out between May and July; six months ago. Brawn thought it was legit, and had no reason to question it. Besides, there were bigger things going on, like the breakaway series and the regulations dispute. When Mercedes acquired Brawn, the contract had been inked for at least four months. Like Brawn, they had no reason to question it.

Well, no reason to question it except Henkel itself pointing out directly to Mercedes (in september) that the deal was invalid.

Brawn GP were negligent when the deal was signed with some lowly frauds, and behind the back of the Henkel senior management.. then Brawn GP put the cherry on the cake (in november), when they actually demanded payment!

You're being very.. huh.. kind, with them (Fry/Brawn GP). lol

...

The real question is why were Brawn GP/ Fry stupid enough to believe the deal was legitimate and ask for payment to Henkel in november?

It was quite obvious at that point that there never was a deal in place with Henkel, as it was clear and relatively easy to check that the deal was made with worthless frauds..

First I have to say that i didn't read all about that Henkel-story, but so far I don't get why Henkel wants to quit now that it's not Brawn GP anymore but Mercedes GP. I thought that they'd rather want to be associated with a well kown brand such as Mercedes instead of the rather unkown name of Brawn Ó_ò

Simply put, the deal was never made with Henkel. The deal was made with frauds who said they were representing Henkel.

After this was made clear by (the real) Henkel, they were threatened by the F1 team to honor the shoddy agreement. So it would be a bit weird for Henkel to suddenly endorse this fake contract and become Mercedes GP sponsors...

If Brawn felt it was legit and said as much, what cause would Mercedes have to question it? They didn't do their diligence, but if everything was done on stolen stationery and drawn up by someone who knew what they were doing, what possible cause would Brawn or Mercedes have to question the deal unti now?


Because that's what confidence artisits like this Willy Luchs do. That's why they're called "confidence artists" to begin with - their livelihood depends on their abilty to gain the confidence and the trust of their intended victims. Look at what Russell King did with Sauber: dummy corporations, non-disclosure agreements and the like. He was good enough to fool BMW, Peter Sauber, the Football Association and Rothschild Bank with one swindle. Luchs, on the other hand, isn't in King's league, but from the sounds of things he's used his knowledge of Henkel's operations, their stolen stationery and three or four other guys to put on a show from Brawn. Brawn weren't even their intended targets since they weren't paying Luchs anything. Henkel was. The objective seems to have been to set up a con to get Henkel to pay out and then to syphon some of the money off and launder it. It was poorly thought-out since Luchs didn't stand a chance of convincing Henkel to front the money, but as he'd already been let go by the company, defrauding the company an using Brawn as the tool seems to be an act of revenge.

As for Brawn asking for payment in November, that comes down to the terms of the phoney contract Luchs created. It probably stated that the money wouldn't flow until the end of the year, and if you go back and read some of the reports from in July - around the time of the European Grand Prix - when Nick Fry was talking about their new sponsor arrangements, he said that the plan was to unvei the team's sponsors with the new car for 2010.


Don't ask me why they didn't look into it; ask Nick Fry. He seems the one responsible for this mess. It's the second time he's gone and screwed the sponsorship pooch - at the end of 2006, Honda should have been a sponsor's dream, but they couldn't rope in a single sponsor. Earth Dream was just a pretty thin excuse forthei inability to get any money.

apparently Luchs isn't even the ex-Henkel guy... I understand he's the guy behind the Dutch letterbox company Brawn GP was actually dealing with; a so called sponsorship agency that 'brought them in contact' with Henkel ... the Henkel connection was Luchs' friend Kai von Bargen ..

God knows what was the motive in that context.. probably money going Luchs' way. But he's a convicted fraudster and Brawn GP were trusting that guy somehow..



To be precise, that was my point..

I don't think this thing is of great concern for Mercedes, surely they bought Brawn GP with the knowledge that this Henkel money was never going to come...

However, it might be of considerable concern for Nick Fry. Personally I'd quietly find a way so he would go smile elsewhere..

I'm wondering what's prompted Henkel to release their statement. I suspect Mercedes may have actually believed it to be legit because Brawn believed it to be legit and Mercedes had no reason not to trust the team they were buying. Mercedes purchased Brawn over a month ago, and so I doubt Brawn asked for the money before now and it's taken Henkel a month to get to the bottom of it. I've also head the suggestion that Mercedes believes the contract to be valid and they want th money (perhaps the implication is that Henkel are trying to pin this one on Luchs because they don't want to deal with Mercedes).

For the UK forumers:

If only this can be made into an episode of Hustle!

I see it differently... I think when Mercedes buy an F1 team they will have a look at the ins and outs of the team in question.

The Pitpass article suggests Daimler took the initiative and learned on September 28th that the deal with Henkel was flaky, they learned this from Henkel itself. This suggests Mercedes was monitoring the Brawn team quite closely, they were well aware of what was going on, at least with that eventual BIG sponsor..

Later, Brawn GP asked Henkel to honor the flaky contract on November 13, 'with a fixed deadline and with the threat of a legal action'.. Henkel responded by raising the middle finger on November 19, they were going to demonstrate that they wont accept 'a fraudulent sponsorship arrangement with Brawn GP, based on clear and obvious fraudulent acts.'

Between these two events above, on November 16, Mercedes officially took over Brawn GP..

With a tin foil hat you can almost believe Mercedes stitched up Fry good and proper, they had a good look at Fry's team and found a big stinking hole in it, then they kindly told Fry they will take over from there, big smoochy kisses and all.. but that would be almost too good to be true, and we'd never know anyway..

Depends whether chappie had ostensible authority on Henkel's behalf. Blackmail strategy though? Wtf? Common-or-garden litigation approach.

I'm starting to understand the Fry's hole in the Brawn/Mercedes paradise.

Fry is the serpent in the Garden of Eden.

What was the Henkel employee's title? I seem to recall (although can't find the link) thatit was something like President of Marketing and Sponsorship.

In which case, I think you've got to look long and hard at Henkel for employing someone so untrustworthy in such a position, rather than at Brawn for dealing with them.

Head of Corporate affairs & Sponsoring.

In my opinion there is a witchunt going on against Fry on here. But the fault and liability doesn't lie with Brawn but with Henkel. The onus should be on them, surely, to have a process whereby a rogue employee cannot obtain a company bank loan by deception and use this money to make a fraudulent sponsorship payment of £90m if he doesn't have the AUTHORITY!!!

What does this companies board do all day? What does their CEO, CFO and FD do? What part of this was the Corp Sponsor guy planning to get away with?!

I think this case is going to be about Henkel minimising their exposure. Clearly Mercedes knew all about this before the purchace of Brawn.

This reminds me somewhat of spygate. For all that McLaren did that was wrong, for it to be possible for Nigel Stepney to have walked out of Ferrari HQ with a copy of the entire blueprint of the Ferrari F1 car remains, to me, a shocker that that was even possible.

Lol, there was no payment. Where did you get that from?

The fact that the contract was signed with the forged signature of the CEO is a strong indication that he didn't have the authority, no?

Not entirely. If chappie genuinely WAS the Head of Sponsorship, it's reasonable to assume that he had the authority to enter into an agreement, and that he would not forge the signature of the CEO. If chappie was NOT, then that's a different kettle of fish.

Well the employee didn't have a criminal record like Luch did. At least that's what it seemed from what Henkel said.

The truth is that Fry is responsible for this no matter how you see it. The guy was in charge of sponsorship deals and he left himself get tricked by a con artist. Sure Luch may be good at tricking people but Fry was supposed to have that position because he can make such deals and avoid tricksters.
He made a deal for 90 million and he didn't even ask to see someone with the authority to give such money. He just trusted the signatures on paper the other guy brought him. Shouldn't he demand any sign agreement to be made in present of both parties?
When you make big deals like that, you all gather in a room and sign the papers. You don't just call a guy to bring the papers to you. You ain't ordering a pizza.

Ok Mr pedantic, 'agree a contract for £90m'. The point is Merc are pursuing that payment and Henkel are defending against having to.

The guy that signed the papers for a sponsoring deal was "Head of Corporate Affairs & Sponsoring". Trusting that this person, the head of sponsoring, can conclude sponsoring deals is hardly the dumbest move of the century.

Employing a fraudster as your Head of Corporate Affairs & Sponsoring ... good or bad? I see Henkel criticise Brawn for a lack of due diligence: where was theirs in employing the guy?

This is hardly the one sided affair it's made out to be.

The point is an employee cannot bind his/her employer to any agreement or contract or whatever that is signed by the boss' signature.

I really don't intend to waste my time replying to people who can't be bothered to fully read posts, but for your benefit, I didn't dispute anywhere that the Corp Sponsorship guy didn't have the authority - but as you say - if a signature was forged, that, I suspect, is Henkels problem and responsibility to prevent. For example, I would expect the due dilligence of a company of that size to require witnessed signatures on expenditure nearing £100m no? We'll we run our business like hitler then, but we've never accidentally agreed a £100m deal before...

As I've said, its surely the onus is on Henkels responsibility to prevent the fradulent signature from their side. It would be due dilligence to ensure witnessed signatures on expenditure over £1m surely?

There appear to be a couple of things that I have a bit mixed up.

My understanding is that there are 3 things going on:

1. an agreement between Brawn and a sponsorship agent, fronted by convicted fraudster Wily Luchs (genuine but worth nothing as the company is worth nothing)

2. a (purported) agreement between Brawn and Henkel guaranteeing the agreement in point 1 - signed by the head of corporate affairs and sponsorship (Henkel claim this is non-binding as the person who signed had no authority)

3. a (puported) agreement with a bank under which Henkel loaned money - signed by head of corporate affairs and/or a forged CEO signature

So as I understand it, the issue of forgery doesn't affect Brawn's position as it only relates to agreement 3 and Brawn only care about agreements 1 and 2.

Please correct where I have this wrong - the reporting on this is all over the shop

Indeed there was no payment reported but money certainly moved; there was a little matter of €16million stolen from the €90million "sponsorhip" fund.
I don't remember the details of the "deal" but it seems the money was to be paid to the Brawn GP in installments and if that were the case, these guys took off with the first installment.

These whole thing stinks big time and the Brawns - assuming they are completely innocent - should have smelled a rat or two. No advertising campaign dishes out €90.000.000 free of charge and would want to keep quiet about it. Hush hush and €90mil don't go together.

I don't see how mercedes would not be tainted in all these. The best action for them would have been to not let Brawn press Henkel for the money and it would all have gone away. No one wants bad publicity even if it is free of charge.

Trusting him for negotiations isn't dumb but trusting him to bring you the papers in your hand IS.

This is what is confusing me. If Mercedes knew in September that the sponsorship deal would be declared as fraud why did they proceed with the purchase on Nov 16 and, bizarely, why under their own ownership did they make a claim for the money on November 19.

All seems weird to me.

For your benefit, if such due dilliengce was not in place, there would not have been any need to forge the CEO's signature. Your post would make more sense if the Brawn team requires a sponsorhip above an 'x' amount should require the physical presence of the CEO of the sponsoring body.

Something else that is strange is there was no mention of lawyers. I would expect lawyers to be involved in the drawing up of contracts...

It seems to me that Mercedes knew they wouldn't get the money but wanted to keep the deal on the list of future income as part of the brawn purchase deal. Has the Merc board been decieved into sanctioning the Brawn purchase? Who signs a 90m sponsorship contract without meeting the CEO, Cfief Financial officer and, as Femi points out, where are the lawyers?

I smell a rat.

Who has benefited from this alledged fraud?

Brawn?

Mercedes?

On the face of it Merc seem to have been spun a yarn, but they knew. Unless the deal with Brawn was penned before September.

Where's Sherlock when you need him

Fry is cooked on the pan till the time if it is Henkel who is trying to rid its contractual responsibility.

Under English law, an employee can. Otherwise every time a company bought paperclips it would have to have the CEO sign it off. Sponsorship deals might be delegated lower down the chain, reasonable for such an employee to bind the company accordingly. Even without the CEO's signature, UNLESS the company says at the outset that the CEO has to sign off the deal.

Ensign, I see that there is a mistake in my post. What I meant to write was:

The point is an employee cannot bind his/her employer to any agreement or contract or whatever that is signed by the boss' forged signature.

I concur. If you cant trust the Head of Corporate Affairs & Sponsoring from a leading company, to be above board in having the authority to arrange sponsorship deals. Then who can you trust?

I think you can trust Madoff.

Yes, but there are ways and means to bail out of a contract if you subsequent change your mind without having to sack an employee, accuse said employee of fraud and sue the might of Mercedes. It would be far easier to pay a get out clause and move on rather than go through this hassle.

I would also imagine that the head of Corporate Affairs would need a counter signatory of some description before committing a blue chip company to millions of Euros.

I'm inclined to believe the fraud story.

I am sure that story is true. But who should lose out in that fraud? Brawn for being silly enough to sign the contract with the fraudster or Henkel for being silly enough to employ the fraudster?

To me, there's no easy answer. Frankly the person who deserves the most criticism in this is the fraudster - one of Brawn or Henkel will end up being big victims.

Brawn.

It's like a partner trying to sell a house without the authority of the joint owner. It wouldn't go through nor would it be legally binding.

Brawn fcuked up! Through their lawyers they should have been 100% certain that the employee had the authority to enter into the agreement. They should have been dealing with lawyers representing the organisation.

Open and shut case IMO

So Fry had conducted nothing wrong.

Not sure.


Perhaps the personnel had limit to his capacity. 90 million is exceeding his 'box'.

All deals should be concluded through lawyers? Ensign will be delighted to hear that idea I'm sure ...

Most transactions are concluded without lawyers being involved. When bought a mars bar from my work's canteen, I didn't involve my lawyer nor the canteen theirs. I also didn't get the sign off of the group CEO. But I doubt they could reclaim that mars bar from me now.

Of course a 90m sponsorship deal is much more important than a mars bar. But then, the Head of Corporate Affairs and Marketing is much more important than someone operating a till. Brawn were dealing with someone at an appropriate level for what they were doing. Hardly open and shut IMO.

The personel in uestion WAS NOT Henkel staff at the time he signed the deal, that is what Henkel is saying, am I correct?

The person that signed the sponsorship deal was not Henkel staff - it was the Dutch front company for fraudster Luchs.

The person that signed the guarantee of the sponsorship deal on behalf of Henkel was Henkel staff - their Head of Corporate Affairs and Sponsorship.

This is odd

http://www.henkel.com/SID-0AC8330A-3ACA35B...rcedes-7230.htm

It seems that they had a long standing relationship with Mclaren/Merecedes going way back.

They stopped sponsoring mac a couple of years ago IIRC.

The Henkel guy did not sign the "contract". He got himself some fancy Henkel paper and forged the CEO's signature.
He turned himself in to the police.

I thought he did that for the bank loan, not the "contract" with Brawn?

What a fantastic name for the crime he commited

If that contract HAS to be signed by the boss, yes, I agree. The company has not consented to it.

It is just about possible to claim that the CEO's signature was just the icing on the cake and the deal was done as soon as the Head of Sponsorship signed up to it. But you'd need a lot of evidence to bring that claim.

This has been discussed in some earlier postings.
I think the fact that the CEO signature was forged in a €90million contract as in this case coupled with Henkel's insistence that the contract did not enjoy appropriate authorization strongly suggests that the company did not consent to it.