Govt turns off Am Cup cash
$11m in funds frozen — Herald, ZB gagged by court order
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 Herald and NewstalkZB were served an injunction in the High Court by America’s Cup Event Ltd (ACE) and Emirates Team NZ from publishing details of a report commissioned by the Crown into public funding of the regatta. NZME, owner of the Herald and ZB, 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 Team NZ and ACE advised NZME that 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 America’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 yesterday afternoon.
MBIE said $40 million has been set aside for the event fee. To date, $29m 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 Event Limited (ACE),” said Iain Cossar, general manager tourism for MBIE. “This will be revisited pending the outcome of the process.”
Cossar added: “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 NZ and ACE are at the centre of an inquiry commissioned by the Crown over the spending of public money, including allegations of a “reclassified” $3m loan, claims of fraud involving a Hungarian bank account, the operation of the Cup itself and worries about public safety
A confidential June 22 letter written by MBIE and the Auckland Council and addressed to Team NZ and ACE and obtained by the Herald reveals the allegations.
It also lifts the lid on officials’ concerns that the event organisers are in breach of obligations.
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.
Dalton rejected any suggestion that Team NZ was involved in fraudulent activity, instead saying it had been conned.
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.
“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.”
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 is looking into claims of misspending by Team NZ and ACE.
The June 22 letter raised the possibility of withholding the next tranche of taxpayer funding because of MBIE’s 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.