Govt halts funding for America's Cup - Herald, ZB gagged by court order

Author
NZ Herald,
Publish Date
Thu, 2 Jul 2020, 4:50PM
Questions remain about Emirates Team New Zealand's America's Cup campaign as the Government seeks answers on its financial spending. Photo / Supplied
Questions remain about Emirates Team New Zealand's America's Cup campaign as the Government seeks answers on its financial spending. Photo / Supplied

Govt halts funding for America's Cup - Herald, ZB gagged by court order

Author
NZ Herald,
Publish Date
Thu, 2 Jul 2020, 4:50PM

The Government says it will not make further payments to America's Cup organisers as it investigates claims over the spending of public money.

The announcement came shortly before the NZ Herald and Newstalk ZB were served an injunction in the High Court by America's Cup Event Ltd (ACE) and Team NZ from publishing details of a report commissioned by the Crown into the spending of public money.

Herald and ZB owner NZME, which was not represented in court, will fight the injunction, on the grounds of public interest, given the level of public money involved.

A lawyer representing ETNZ and ACE advised NZME that the court Justice Christine Gordon had ruled: "This court orders that NZME Publishing Ltd and any other persons served with this order are restrained from publishing the interim Beattie Varley report into Americas's Cup Event Ltd or any part of the contents of that report or any part of the recordings referred to in that report until further order of the court."

Team NZ boss Grant Dalton emailed his lawyers with the comment "nice lads" after he was advised of the decision. NZME was copied into the email.

The Ministry of Business, Innovation and Employment confirmed they had suspended public funding in a statement this afternoon.

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

"While Crown and Council work through this process regarding the claims made relating to the organisation of the 36th America's Cup, we are not intending to make further payments to America's Cup Events Limited (ACE)," said Iain Cossar, general manager tourism for MBIE.

"This will be revisited pending the outcome of the process."

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

"This process is 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."

Team New Zealand and America's Cup organisers are at the centre of an inquiry commissioned by the Crown over the spending of public money, including allegations of a "reclassified" $3 million loan and claims of fraud involving a Hungarian bank account.

Team NZ boss Grant Dalton has confirmed that the team lost a seven-figure amount, but said that it was the victim of an international scam. No public money was lost in the scam, he said.

A confidential June 22 letter written by MBIE and the Auckland Council obtained by the Herald reveals allegations around the handling of public money; the operation of the Cup itself and worries about public safety. It also lifts the lid on officials' concerns that the event organisers, ACE and Team NZ, are in breach of obligations.

Hacking investigation

A multinational police investigation is under way into how a hacker posing as a European TV contractor convinced Team NZ to send a large financial payment to a Hungarian bank account.

NZ Police confirmed this week that the Auckland City Financial Crime Unit was investigating the scam with the help of officers based in Europe and Hungarian authorities, after receiving a report in December.

The payment was referenced among a raft of concerns and allegations set out in a June 22 letter, obtained by the Herald, from Auckland Council and the MBIE to ETNZ and America's Cup Event Ltd.

Team NZ admits it was swindled out of a large figure but has hit back at concerns over its handling of public money.

Dalton rejects Team NZ's involvement in fraud

Dalton strongly rejected any suggestion that Team NZ was involved in fraudulent activity, instead saying it had been conned.

"Some time ago I approved an invoice for a large contractor in Europe," Dalton said.

"And, no, I did not check the noughts and the ones on the bank account. It was the correct invoice as per the contract, and the money was sent to Hungary."

He has told media a hacker had gained access to material belonging to a European-based television contractor who the syndicate had been working with, including details of contracts and payments due dates.

Team NZ received an email which they thought had come from the contractor, advising of a new Hungarian bank account into which they should make a scheduled payment.

A seven-figure sum was subsequently transferred into the account. The alarm was raised weeks later when the contractor asked about the missing money.

Dalton said the hacker had changed one character in the contractor's email address when contacting them about the new account details.

New Zealand police were now working with police in Europe to investigate the scam. Some of the money had been recovered.

Dalton said it was immediately reported to MBIE. He stressed it was not Government money which went missing.

MBIE seeks answers

MBIE is looking into claims of misspending by Team NZ and ACE.

The June 22 MBIE-council letter also revealed concerns and allegations around the handling of public money, the operation of the Cup itself, worries about public safety, and showed officials were concerned about whether Team NZ and America's Cup Events were in breach of their obligations.

The letter raised the possibility of withholding the next tranche of taxpayer funding because of their concerns.

Economic Development Minister Phil Twyford initially said the pot had not been frozen while MBIE's review took place.

Twyford conceded there could be "theoretically" tens of millions of taxpayer dollars being spent while an active review was conducted into whether public money had been misused.

In all, the Government and council have spent $250m on hosting the Cup. The council is planning to spend a further $20m to support the regatta and other events next year, and another $100m to spruce up the waterfront in time for the Cup and other events in 2021.

In a statement - accompanied by a letter responding to MBIE and Auckland Council - Team NZ said MBIE and the council should be satisfied the syndicate and ACE were not in breach of their hosting agreement obligations.

"ETNZ and ACE categorically deny any wrongdoing and consider that they have already addressed the concerns of MBIE and [Auckland] Council, and their advisor Beattie Varley," Team NZ said.