Police arrested former BayernLB bank executive Gerhard Gribkowsky on Wednesday on suspicion of irregularities in the sale of a firm connected to Formula 1 motor racing.

Prosecutors said Gribkowsky, a former director of the state-owned regional bank, was "strongly suspected of corporate corruption, breach of trust and tax evasion."

Gribkowsky - who was the bank's chief risk officer - allegedly received a total of 37 million euro ($50 million) for his cooperation in selling BayernLB's shares in a company that holds the commercial rights to Formula 1 to private equity group CVC.

'Advisory payments' to Austrian firms

The sale of the bank's stake was never properly evaluated, prosecutors say.

They say that the money was transferred as "advisory payments" - wired from Mauritius and the Caribbean - and that these were paid to Austrian firms set up for the purpose, according the German daily newspaper Sueddeutsche Zeitung.

Last week, Gribkowsky told the same newspaper that he would prove that the payments were not obtained illegally.

The German daily newspaper Frankfurter Allgemeine Zeitung reported on Tuesday that Bavaria's state finance ministry was pushing for BayernLB, which was rescued with public cash during the global financial crisis, to conduct its own probe.

Gribkowsky could spend up to 10 years in jail if he is found guilty, while the investigation could lead to Germany's biggest-ever corruption case.

Author: Richard Connor (AFP, AP, dpa)
Editor: Nancy Isenson