Former Formula One chief Bernie Ecclestone was asked by his ex-son-in-law James Stunt to provide a US$10 million guarantee for a letter of credit (L/C) to back a gold bullion business venture "that made no commercial sense", a court has heard.

The former husband of heiress Petra Ecclestone is one of eight defendants accused of participating in a scheme that saw £266 million (US$334 million) deposited in the account of a Bradford gold dealer from 2014 to 2016.

In one of Britain's biggest ever money laundering prosecutions, Stunt is accused of turning to money laundering after he started running out of cash when his marriage to Petra collapsed.

L/C backing

The L/C guarantee features in the trial as part of the prosecution's argument that Stunt was not the billionaire he claimed to be and lacked the personal wealth and available capital resources to pursue his business goals. The Ecclestones are not defendants in the trial and are not accused of any wrongdoing.

"James Stunt claimed he was unable to guarantee it himself because all his money was tied up in America. Instead, he offered his father-in-law Bernie Ecclestone as a guarantor," prosecutor Nicholas Clarke told a court in Leeds.

Ecclestone, 91, backed the L/C for what he was told was a deal to lease gold from a bank for a scheme described in court as a "vanity project" to make Stunt & Co gold bars and Formula One souvenir coins. Just a few gold bars and no coins were made.

Sophisticated scheme

Instead the gold was allegedly used in a money laundering scheme operated by the defendants to launder the proceeds of crime, such as street cash from drug deals or cash that had not gone through the books of a business so to avoid paying tax on it, into assets that appeared to have a legitimate origin.

The defendants are accused of hiding the origin of the money in a "very sophisticated scheme" by washing it through a company bank account and using the proceeds to buy gold, which was shipped to Dubai.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.