High Performance Sport New Zealand chief executive Michael Scott has demanded answers into sprint coach Anthony Peden's surprise exit from Cycling New Zealand.

Peden resigned on Wednesday.

HPSNZ confirmed the allegations include bullying, drinking and an inappropriate relationship with an athlete.

Scott confirmed an investigation will be launched into how it came about. The terms of reference will be confirmed and shared within a week.

The taxpayer will invest $4.4 million in CNZ via HPSNZ this year, so accountability and in-depth answers are expected.

"The high-performance environment is all about pressure and intensity, but there is absolutely no place for bullying," Scott said.

"I became aware of this in early May and immediately contacted [Cycling New Zealand chief executive] Andrew Matheson. I congratulate him on quickly taking action. What was known within HPSNZ and what was done with that information is something that will come out of our investigation.

"This will focus on HPSNZ – our people, our processes and our actions. Our role is to give athletes the best possible chance of success, and I expect this organisation to treat with the utmost seriousness anything that may be a threat to athlete welfare."

Yesterday Scott issued a mea culpa on behalf of his organisation with a statement saying "we could and should have done more with the information we had" and "integrity and ethics are fundamentals of sport".

NZME has repeatedly tried to contact Peden to establish how his departure unfolded.

However, the coach and CNZ staff are believed to be bound by confidentiality clauses, despite the taxpayer helping to fund their existence.

The Herald understands a wider culture of stress pervades the CNZ environment, arguably driven by HPSNZ's overarching strategy to prioritise medals over anything else.

Given the annual funding round has become directly related to podium finishes, sources told the Herald CNZ's default position, like many sports, has been to create a "nothing to see here" façade, regardless of any issues brewing.

CNZ's funding has dropped from $4.7 million (2016) to $4.2 million (2017) and $4.4 million (2018).

Peden was understood to have employed a my-way-or-the-highway approach, but his methods had extended beyond his contractual brief.

The decision could place the 2020 Olympic medal dreams of men's riders - Ethan Mitchell, Sam Webster and Eddie Dawkins - and women's riders – Natasha Hansen and Emma Cumming - in jeopardy.

In the original press release, Peden said his approach was not aligned to that of CNZ.

"I can't talk in any detail around that," Matheson said.

"It relates to an employee-employer relationship.

"Anthony's done an amazing job and we thank him for that."

At face value, Peden's CV glitters since taking over as sprint coach in September 2013.

He assumed the role after Justin Grace had built that arm of the sport in New Zealand from a cottage industry into a world power.

Peden guided the programme to three world championship titles – all to the men's team sprint - and 10 medals, an Olympic silver at Rio and 14 Commonwealth Games podium finishes.

However, this year's world championships in the Netherlands - a HPSNZ pinnacle event - failed to deliver a sprint medal. The men's team slipped to sixth as they tried to peak for two events in five weeks.

On Wednesday, Matheson said Peden and CNZ had been talking for a while about the coach's future.

"It's been a tough journey through the world championships and Commonwealth Games, so it [Peden's decision] hasn't come out of the blue."