3 Jul 2020

Team NZ forced to navigate through tricky headwinds

10:00 am on 3 July 2020

The America's Cup has always attracted scandal and controversy - so what's the story with the allegations swirling around Team New Zealand?

Emirates Team New Zealand christen their first AC75 monohull "Te Aihe" (Dolphin) at their team base in Auckland on 6th September 2019.

Team New Zealand christen their first AC75 monohull Te Aihe (Dolphin) at their base in Auckland last September. The America's Cup hosts are now caught up in controversy over informants, funding and a Hungarian scam. Photo: Richard Gladwell / Sail-World.com

The informants

Team New Zealand put out a statement on Monday night saying it had outed "informants" in the event organisation, America's Cup Event (ACE) Limited.

As Team New Zealand manager Grant Dalton explained it on Morning Report, these were people he "more than worked closely with them, I employed them".

"This is within our own organisation."

As Dalton described it, the syndicate's sailing team works on the top floor of the building and the event team works on the floor below.

Despite that, they effectively work together.

"Everybody has access to everywhere, we have no reason not to do it that way. We're on different servers, different email addresses and such but you have access to the boat sheds and the design office," Dalton said.

One of the people Dalton had become suspicious about was brought up into the team, so they could keep a closer eye on them, he said.

About two weeks ago, some confidential and sensitive information came back from Europe. "At that point really for these guys, the game was up," Dalton said.

The informants' contracts were terminated.

Emirates Team New Zealand CEO Grant Dalton.
Emirates Team New Zealand christen their first AC75 monohull "Te Aihe" (Dolphin) at their team base in Auckland on 6th September 2019.

Team New Zealand boss Grant Dalton says he hired and fired two employees after becoming suspicious about them. Photo: Emirates Team New Zealand

The informants' allegations

Team New Zealand said the informants had also made "highly defamatory and inaccurate allegations" about financial and structural matters at the syndicate and ACE.

Team New Zealand denies any wrong-doing.

However, the Ministry of Business, Innovation and Employment is investigating.

Why is MBIE investigating?

The government and Auckland Council have pitched in with almost $250 million of funding for next year's America's Cup.

The government's contribution amounts to $136.5m, while the council's spending has been focused on infrastructure to support the event.

Because the allegations of financial mismanagement potentially involve public funds, MBIE has been brought in to get to the bottom of it.

Team New Zealand denies any wrong-doing.

What does MBIE say?

Not a lot. In a statement, it said its investigation was ongoing and there are contractual agreements in place.

"As to not undermine the current process, to protect commercial sensitivity and to protect the integrity of the ongoing investigation, we are unable to go into further detail at this time.

"We will provide an update when more information is available," the statement said.

On Thursday, MBIE said it was suspending any further payments to ACE while the investigation was underway.

"This will be revisited pending the outcome of the process," the statement said.

"$40 million has been set aside for the event fee for AC36. To date, $29m has been paid to ACE in line with contractual funding milestones."

The letter from MBIE and the council

Team New Zealand has confirmed it was sent a letter on 22 June that was co-signed by Auckland Council and MBIE.

On Wednesday, Team New Zealand released extracts of its own letter in reply.

In it, Team New Zealand and ACE said they believed that "the concerns of the Hosts can be satisfied and ACE/ETNZ are not in breach of their obligations under the Host Venue Agreement".

The extracts of the letter released by Team New Zealand also revealed details about a Hungarian scam and question marks about $3 million from MBIE.

The Hungarian scam

Team New Zealand said ACE had fallen victim to an email scam and had sent money to a Hungarian bank account.

That was reported to the police, who alerted international authorities.

Attempts have been made to recover the money.

Police said they received a report last December about an international email scam.

The Auckland City Financial Crime Unit is investigating, and New Zealand police liaison officers in Europe are also involved, working with Hungarian authorities.

Team New Zealand chief executive Grant Dalton told Checkpoint last night how the scam had unfolded.

"[In] November last year a sum of money was paid to a legitimate contractor who's involved heavily with the TV production in Europe to a non-legitimate bank account.

"Now why the two things are important be it the money is gone is that let's call them the informants - one of them was the guy who pushes the button that sends the money and it's a duty of care if nothing else by accountants, particularly when the sum of money is that high .... but when you're in that sort of money you should check that the bank account is correct and it wasn't."

He said he is determined to get the bottom of what happened and is also adamant that the syndicate and its events arm will prove that they have not misused public money in any way.

The $3 million

Team New Zealand said it had received $3 million from MBIE, but it said it was never categorised as a loan and was a payment for work that had been done.

The Team New Zealand base on Auckland's Viaduct Harbour.

The Team New Zealand base on the Viaduct Basin in Auckland. Photo: Emirates Team New Zealand

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