by Max Mosley
A very ingenious but illegitimate way to run under the weight limit was invented by the BAR Honda team in 2005. Their fuel system included a hidden tank that could hold five or six kilos of fuel. At the last refuelling stop, the hidden tank would be filled along with the rest of the system and would then remain full until the end of the race. However, when the fuel was drained at the end of the race so that the car could be weighed without fuel to make sure it was not under the weight limit, the hidden tank was so arranged that its fuel stayed in the system. As a result, the car appeared to be over the weight limit and thus legal when without the fuel it would have been under the limit.
In effect, the fuel was being used as ballast to make the car legal when weighed, yet except for the last part of the race this fuel was available so the car could run under the weight limit. The advantage was bigger than it sounds because the car would have a lower average weight for the race than it would otherwise have had.
When this was discovered, the scrutineers reported the matter to the stewards. After very long deliberations, the stewards inexplicably decided that no action was necessary. Fortunately, the FIA as well as the teams had a right of appeal to the FIA’s International Court of Appeal. This court is independent of the FIA administration and made up of senior outside lawyers. The FIA’s right of appeal was hardly ever exercised. The team hired David Pannick QC to appear for them in the Court of Appeal. Perhaps British American Tobacco, their sponsors, remembered his brilliant performance for us against them in the double-livery arbitration described earlier. By then Pannick and the head of his chambers, Ian Mill QC, had become the go-to lawyers for Formula One teams in trouble.
We argued that the hidden tank amounted to cheating and the team should be excluded from the championship. The court was not satisfied it really was deliberate, however, and imposed a more modest, but nevertheless severe, two-race ban. The ban included the Monaco Grand Prix. Litigation was threatened but did not materialise.
At the beginning of July 2007 I received calls in quick succession from Ron Dennis, the McLaren team principal, and Jean Todt, his Ferrari opposite number. Ferrari had received an email from someone working in a Surrey photocopy shop headed ‘Industrial Espionage’. They very nearly didn’t open it (each team gets lots of strange emails) but when they did, they could hardly believe what they were reading. Attached were full details of their current Formula One car, including all its most secret design data. A lady had come into the shop with 780 pages of technical documents and asked the person behind the counter to put everything on CDs. It was the complete technical details of the current Ferrari Formula One car plus other important information. A Formula One fan working in the shop had realised its significance and emailed the digital version to Ferrari.
This was not the first time someone had stolen technical information from Ferrari. Sometime before, they had been tipped off that an engineer working on Toyota’s Formula One car in Germany was using their data. Ferrari informed the German police, who dealt with the matter. Paddock gossip spread that the police were amused to find the Ferrari prancing horse on the screen when they started the Toyota engineer’s computer. For whatever reason, Ferrari never alerted the FIA and we only heard of the incident indirectly.
The photocopy shop evidence was much more serious. It involved the entire IP of the current Ferrari Formula One car, 780 pages of drawings and technical data, plus full information about how the car was operated. It revealed all the technical secrets, everything necessary to build and run the latest Ferrari, and was an absolute gold mine for any other team. When I heard this, I could see the reason for Jean Todt’s call. It also helped us solve a mystery about a feature of the Ferrari to which McLaren had drawn our attention at the start of the season. When it was examined, our technical department did not think it broke any rule, but we could not work out how McLaren knew about it.
Following the tip-off, lawyers acting for Ferrari under a court order had raided the home of McLaren’s chief designer, Mike Coughlan. The lady in the shop was his wife and had left her name and address with the material she had asked to be copied. The lawyers recovered CDs containing the entire technical IP of the current Ferrari Formula One car. The 780-page printout had, in the meantime, apparently been destroyed. Although Ferrari had already brought the matter before the English High Court when applying for the search order, they had also complained to the FIA. We clearly had to act. It almost goes without saying that if a team acquires all their main rival’s current technical information and intellectual property, they gain a huge and very unsporting advantage.
McLaren were summoned to the World Council and brought Ian Mill QC to defend them. They claimed they had held an internal enquiry which showed their chief designer had been acting entirely alone and no one else in the company knew of, or had anything to do with, the Ferrari IP. This was my first encounter with the one-rogue-employee defence, later made famous by Rupert Murdoch’s newspaper the News of the World. McLaren backed this up with a document apparently signed by most of their engineers confirming they had no knowledge of Ferrari’s documents.
The council did not believe the defence story could possibly be true. We were all convinced of McLaren’s guilt but, during the discussion after we had listened to McLaren and their legal team, I and two other lawyers on the council pointed out that we had no hard evidence that what they had told us was untrue, still less that McLaren had actually made use of Ferrari’s IP.
It seemed quite obvious that McLaren had used the information and their chief designer had not (as they claimed) acquired it just as a curiosity for his private collection. But this was not the same as proof. If we were to convict without concrete evidence, they would go to a civil court with their expensive lawyers and almost certainly win. Very reluctantly, we had no option but to acquit. Back in the Crillon, the hotel next to the FIA headquarters where I always stayed, I had a call from a very unhappy Sergio Marchionne, CEO of Fiat. A short time later, Luca di Montezemolo, chairman of Ferrari, called. Both were outraged that McLaren had got away with it. Wearily, I explained the legal difficulties.
Later that summer, Fernando Alonso, who was driving for McLaren, fell out with Ron Dennis over Lewis Hamilton, the other McLaren driver. Alonso told Flavio Briatore, his manager, that emails existed confirming other engineers in McLaren knew about the Ferrari IP. Flavio told Bernie, who in turn told me. If this were true, it would show McLaren had indeed been using the material and had misled the World Council. Eventually, I was shown copies of some emails which were very compromising.
To prove Alonso’s allegations, we needed copies of the emails and wrote to all three McLaren drivers (Alonso, Hamilton and their test driver, Pedro de la Rosa) offering them a deal. We explained that if they came forward within a specified timeframe with details of everything they knew, they would not be individually pursued for participating in a breach of the rules. On the other hand, if they did not come forward and were later discovered to have had any knowledge or evidence about use by McLaren of the Ferrari IP, they could be found to have ‘brought the sport into disrepute’ and their licences would be at risk. This was the only way to pursue the case because, at the time, ordinary team employees and even the company bosses did not have FIA licences, so we had no direct authority over them.
Our threat to their licences produced the compromising emails and McLaren were summoned back to the World Council. This time we had the evidence and they were obviously guilty, despite Ian Mill’s best efforts. The emails showed beyond any possible doubt that others besides Coughlan had had access to the stolen material. But what should we do? If we excluded the team from the 2007 World Championship we would wreck a great battle between Lewis Hamilton and Ferrari’s Kimi Räikkönen. Worse, a ban would possibly have to be for 2008 as well as 2007 because the 2008 car was already being designed during that summer and further investigation might show it, too, incorporated stolen Ferrari IP. But a two-year ban might put McLaren, with 1300 employees, out of busine
ss.
I and other lawyers on the council were for a ban. ‘Hard cases make bad law,’ we said. The majority, however, wanted some other penalty, mainly because of the championship. I felt that McLaren’s possession of all Ferrari’s IP meant that Hamilton had an unfair advantage over Räikkönen, which had already skewed the championship contest, but the majority view prevailed. Happily, Kimi won the 2007 World Championship by a single point from Lewis, so the distortion didn’t matter in the end.
In spite of all the evidence, McLaren continued to maintain that only their chief designer had seen the Ferrari secrets and, they said, had kept everything to himself. This irritated the council because it was obviously untrue and had now been proved to be untrue. Eventually, it was Bernie Ecclestone who suggested a $100 million fine. Those who wanted a ban, including me, reluctantly agreed.
Even today, I still think a ban would have been better. McLaren would certainly have appealed and might have gone to a civil court or, more probably, to the FIA Court of Appeal, where they would have had a completely new hearing in front of outside independent lawyers. Those avenues might well have led to a better solution. A financial penalty, no matter how astronomic, is seldom appropriate for a sporting infringement, particularly one giving an unfair competitive advantage. It leaves a feeling that the advantage has somehow been bought. It should never be forgotten that the value of the stolen IP was significantly greater than $100 million – at least if you consider what Ferrari must have spent to acquire it.
In an amusing postscript, McLaren claimed that the cash part of the fine (around £32 million) was a legitimate business expense and therefore tax deductible. Although McLaren did not actually claim that cheating was part of its business, a UK tax tribunal thought that this is what it came down to and, surprisingly, ruled in its favour. The judgment stated that the business ‘carried on by McLaren was not limited to acting within the confines of the Concorde Agreement and could include “cheating”’. When the tax authorities appealed to the UK’s Upper Tax Tribunal, a High Court judge analysed the lower tribunal’s decision and ruled that ‘deliberately acting outside the rules (or cheating, as it is more commonly called in sport)’ could not be ‘an activity in the course of the trade’ for tax law purposes and consequently that McLaren could not offset the fine against its tax bill. It would have been entertaining if McLaren had made the same arguents before the WMSC as it had in the tax tribunal.
The result made headlines and inevitably attracted the attention of critics and rent-a-quotes. You could understand hired PR people trying to put a spin on what McLaren had done but a few supposedly independent commentators were suggesting we had somehow picked on them, completely ignoring the fact that the team had knowingly stolen not just the odd drawing or piece of information, but the entire technology of Ferrari’s current Formula One car, and then repeatedly lied about it when challenged. Furthermore, we had been given evidence that McLaren’s spy in Ferrari, Nigel Stepney, had been sending them a constant stream of SMS messages. The Italian police had provided Ferrari with a list, although only the time, date and location, not the content. The number increased substantially during race weekends, making it highly probable that Stepney was keeping McLaren up to date with information about Ferrari’s actions and strategy during each Grand Prix. Indeed, some of Coughlan’s emails within McLaren referenced the strategy that Ferrari was planning to adopt.
It seemed to me that to maintain, in the face of all this, that we had engaged in a witch-hunt against McLaren, or that we had in some way behaved improperly, was beyond absurd. Given the evidence and a complaint, what were we supposed to do? Simply ignore it? Or pretend it had nothing to do with the World Championship? Refusing to acknowledge that McLaren’s behaviour was very wrong indeed and trying somehow to suggest that the FIA was itself to blame for the whole thing struck me as quite simply cretinous.
McLaren didn’t appeal against the fine, probably realising there was a risk that the FIA’s International Court of Appeal might cancel it and substitute a sporting penalty, in all likelihood a ban. The fine, though large, was something they could handle but a lengthy ban could have been catastrophic for the company. We also excluded McLaren from the Constructors’ Championship. Their loss of revenue from the prize fund as a result of their demotion from second place to last in the Constructors’ Championship counted as part of the $100 million and went to the other teams rather than to the FIA. This is because McLaren had been lying second to Ferrari in the championship before they were excluded, so all the teams below McLaren (i.e. all except Ferrari) moved up a place and got more money. Thus the fine gave us about $60 million for grassroots motor sport, but also distributed some $40 million among the remaining teams. The penalty, significant though it was, did not stop McLaren winning the Formula One drivers’ title the following year with Lewis Hamilton by one point from Felipe Massa.
Had McLaren come to the first hearing, put their hands up and admitted their guilt, the fine would have been very much lower. Had they turned up without lawyers and said to the council: you are all ex-racers, can you honestly say that, given an opportunity like that, you would not have been tempted? It was the stubborn, obviously untrue insistence that they were innocent, reinforced by a large and expensive legal team, that led Bernie to joke that Ron was fined $5 million for the offence and $95 million for being a c***.
Knowing that the size of the fine would attract a lot of media coverage, I asked our lawyers to prepare the detailed reasons as quickly as possible. They actually worked all night on the document so that it was ready for distribution first thing the following day. Hostile elements in the press immediately took this as evidence that the decision had been pre-cooked. Having worked so hard only to find their efforts criticised in this way, our legal team remarked that, as always, no good deed goes unpunished.
One of the most exasperating aspects of the whole saga was the suggestion in various blogs and articles that this was all part of some vendetta of mine against Ron Dennis. A lot of people think I dislike Ron. This is not true. Of course, he could be annoying in meetings but only because he was defending what he saw as his company’s interests. And he was prepared to do this when other team principals who might have secretly agreed with him were not. It could be annoying but it was his job as he saw it and I had no personal problem with that. I often thought he was wrong (for example, when he fought hard to retain the absurdly expensive qualifying cars) but that did not make me dislike him.
Any reasonable person would admire Ron’s achievements, one of Formula One’s great success stories. The only real black spot is that he allowed his company to lie repeatedly to the FIA about ‘spygate’, and again over the incident at the 2009 Australian Grand Prix (see below). I thought McLaren deserved better leadership than that.
While I had no problem with Ron, he may have had one with me. Tom Bower, in his book about Bernie, says that Ron commissioned a psychologist to do a report on me. If true, it’s very funny, but I would never have gratuitously had a go at him or indeed anyone when I was acting as an elected official. At the insistence of Norbert Haug, the Mercedes Formula One chief at the time, Ron and I shook hands publicly in the Spa paddock in September 2007 but neither of us was comfortable doing so. It felt like a PR stunt.
To date, the FIA’s share of the fine has aided the national motor sport authorities in 107 countries with more than 330 projects. And the money was not completely spent until very recently. Part of the decision was that we examine the 2008 McLaren car to ensure it used no illegally acquired Ferrari IP. McLaren said they welcomed this and we could look at whatever we wished. They may not have anticipated we would take them at their word and send a forensic IT team to back up our technical people and go through 1.4 terabytes of their emails and other documents. The IT experts found further damning evidence. Confronted with a 23-page report which showed conclusively that they had seen the Ferrari information (including references to their ‘mole in Ferrari’ and waiting until the ‘FIA agg
ro’ was finished before using a particular device), McLaren finally came clean. On 5 December 2007, Martin Whitmarsh wrote to the World Council on behalf of McLaren, apologising for what had happened.
None of this took place in secret – on the contrary, the media were kept fully informed – yet even today, eight years later, you can still read articles by the odd lazy or incompetent journalist suggesting McLaren did nothing wrong and were penalised without evidence. The Greek chorus never rests.
McLaren’s owners promised to make management changes and on that basis we felt we had to drop the matter. The alternative was in effect to shut the team down. A few months later, Martin Whitmarsh, who had taken over the team principal role from Ron Dennis, invited me to lunch at McLaren to patch things up. Paddy Lowe, McLaren’s engineering director, was at the lunch and it was a friendly affair. When alone with people I had known for years, I always became very conscious of the consequences of what the governing body does. Martin confirmed that a ban would have been more than serious. I couldn’t help feeling it was all so unnecessary – it could so easily have been nipped in the bud if McLaren had alerted Ferrari as soon as the stolen IP was offered to them. That, after all, was the obvious and honourable thing to do, as Martin Whitmarsh indeed acknowledged in his letter.
The unsolved mystery is what motivated Nigel Stepney to hand all that information to McLaren in the first place. Did he have some sort of grudge against Ferrari? Or was he induced to do so and, if so, by whom? Is it really credible that he gathered together and secretly copied hundreds of pages of secret information to pass to Coughlan in Barcelona and then sent a constant stream of SMS messages to McLaren, all without having a strong reason to do so? One can speculate but I doubt we shall ever know. Stepney died in 2014 when he stepped in front of a lorry on the M20 motorway.
Meanwhile, it emerged that a McLaren engineer had taken some of their IP with him to Renault. It was orders of magnitude less extensive than the Ferrari IP acquired by McLaren but, most importantly, it was not an action by the Renault team; it was an individual taking information with him when changing jobs. Renault immediately made a full admission rather than engage top lawyers and set out to mislead the World Council. We, nonetheless, conducted a full investigation and a hearing to make sure we had the full picture, including an analysis of every piece of McLaren information that Renault had seen. It was soon clear that the information was never used, and indeed couldn’t have been useful. Renault had broken the rules by not preventing the information from being taken across, but to reinforce the point that, in sport, a quick and honest admission is an essential part of the process when rules are broken, we imposed no penalty. Amazingly, some of McLaren’s supporters in the media have suggested that the treatment of Renault was inconsistent with what happened to McLaren.
