Mercedes principal Ross Brawn at the hearing at the FIA headquarters in Paris on Thursday. Michel Euler / Reuters
Mercedes principal Ross Brawn at the hearing at the FIA headquarters in Paris on Thursday. Michel Euler / Reuters
Mercedes principal Ross Brawn at the hearing at the FIA headquarters in Paris on Thursday. Michel Euler / Reuters
Mercedes principal Ross Brawn at the hearing at the FIA headquarters in Paris on Thursday. Michel Euler / Reuters

Formula One: Verdict in Mercedes trial expected to come down Friday


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Mercedes and Pirelli will learn Friday if they will face punishment over their involvement in last month's controversial tyre test, following a FIA hearing Thursday in Paris.

If found at fault, the team could be required to forfeit points won, with a maximum punishment of removal from this season's competition.

After more than six hours of deliberation, the president of the International Tribunal convened to hear the case, Edwin Glasgow, confirmed the tribunal judges would need to work into the evening before delivering a verdict.

Mercedes were brought before the hearing on suspicion that they contravened the FIA's ban on in-season testing by using their current car and regular drivers Lewis Hamilton and Nico Rosberg in the three-day, 1,000km test organised last month by Pirelli - Formula One's sole tyre supplier.

Mercedes's defence team claimed they undertook the test to help Pirelli explore what was behind the degradation issues suffered by several teams earlier this season.

Paul Harris, representing Mercedes, said their actions amounted to a "laudable aim" with the purpose of addressing "a Formula One problem". He added that punishing the team for their involvement in that work would be "downright unfair".

However, that view is at odds with Pirelli's take on the purpose of the test, which it claims was 90 per cent focused on tyres being brought in next season.

Mercedes also claim they sought permission from the FIA race director Charlie Whiting before using their current car at the test.

The FIA legal counsel Mark Howard confirmed the governing body did not give Mercedes permission to take part in the test with their 2013 car, branding Whiting's apparent approval "irrelevant".

Key to the Mercedes defence is their insistence that the responsibility for organising and conducting the testing programme rested solely with Pirelli. Harris said: "Pirelli did it all. They were in charge of it all and it's obvious why: it was a Pirelli test."

Mercedes's defence also rests significantly on their assertion that they were given permission by Whiting to use their 2013 car. Running counter to that is Howard's view that Whiting was not authorised to make that decision, adding that such a move could be undertaken only by the FIA's World Motor Sport Council.

Mercedes revealed they had spoken to Whiting in early May to discuss the prospect of using their 2013 car, as they did not have an older car at their disposal.

The Mercedes team principal Ross Brawn called for "perspective" over the significance of the data gathered by his team over the course of the three days.

Brawn, who has previously revealed that the final decision to agree to the Pirelli test was his alone, said access to telemetry data was an "inevitable consequence" of the work being done, but said Mercedes sought to keep their exposure to it "at a minimum".

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”