The Serious Fraud Office (SFO) appears to be looking into the use of taxpayer funding of the America's Cup, with its director, Julie Read, making calls to senior government officials about an investigation which largely
cleared a company closely tied to Team New Zealand.
After days of refusing to comment on revelations in the Herald about its handling of whistleblower complaints about America's Cup Event Limited (ACE), a company set up to run next year's regatta and largely funded by taxpayers, the Ministry of Business, Innovation and Employment (MBIE) confirmed that its chief executive, Carolyn Tremain, had spoken to the SFO, possibly more than once.
"We can confirm that the secretary for MBIE [Tremain] and the director of the SFO have had discussions about this matter," a spokesman for MBIE said.
MBIE has refused to answer questions about whether as a result of its investigation it provided material to police or the SFO, or if the SFO had requested it to provide information.
A spokesman for the SFO confirmed the contact but refused to elaborate or say whether the organisation had begun an investigation.
A Team New Zealand spokesman said no one from the SFO had contacted anyone at the organisation or ACE.
"Our only information that we have ever had regarding the SFO has been that MBIE told us that they had considered it in January when discussing options," Team New Zealand chief executive Grant Dalton said in a statement.
Previously, MBIE has minimised the issues at ACE as being about record keeping, largely overlooking sharp criticism of ACE's governance.
When a summary of the final version of an audit into ACE was released, MBIE issued a joint statement with Team New Zealand and the Auckland Council welcoming its findings and looking forward to the event.
Team New Zealand chairman Sir Stephen Tindall said the investigation amounted to "total vindication" but has refused to be interviewed since.
ACE operates from within Team New Zealand's base on the Auckland waterfront and shares Dalton as its chief executive. It will receive up to $40 million from taxpayers to run the world's oldest sailing regatta and associated events.
In July the Herald revealed that MBIE had raised concerns about ACE and had asked forensic accountants Beattie Varley to investigate.
As well as looking into whether a loan had been reclassified as a design fee, Tremain alluded to concerns around "poor governance including suggestions that records should be retrospectively amended".
Team New Zealand went to court to prevent the Herald from revealing the details of an initial report.
After the Herald revealed the probe and prepared to disclose its contents, MBIE froze funding to ACE.
Two months later, the final Beattie Varley report concluded that it had seen no evidence that event money had been misapplied or of misappropriation of funds. MBIE resumed funding after the final report was released.
Several weeks later, a heavily redacted version of the full report was released, revealing the elaborate lengths Team New Zealand went to justify the $3m payment.
Over time, MBIE's statements about the investigations have subtly changed. Initially it claimed the probe was an attempt to look into the allegations of the whistleblowers.
Later it admitted the probe was not an attempt to test the veracity of statements made to it by ACE.
Last weekend the Herald revealed that Beattie Varley and MBIE had refused to take other evidence from the whistleblowers during the second phase of the investigation.
This included a recording of an ACE meeting in which Dalton spoke of the need to "boogie the numbers" in relation to a disputed $3m design fee.
The Herald also revealed emails which appeared to be at odds to what ACE told the investigation on the key questions of whether a $3m fee - apparently a charge for boat design - was initially a loan from ACE to Team New Zealand.
Just hours before confirming the SFO's involvement, MBIE defended its investigation.
It has refused interview requests from the Herald for more than two months and has refused to allow Beattie Varley to speak to the Herald.
In a statement, MBIE's general manager of tourism, Iain Cossar said he had the "utmost confidence in the investigation" and Beattie Varley's work.
Cossar also defended the decision not to take possession of the recordings, saying a description of the recording provided to the organisation "matched what had already been provided to and assessed by Beattie Varley, and supported the conclusions Beattie Varley had already arrived at".
MBIE also revealed that it considered "the provenance of the information in the context of the breakdown of the relationship between the parties involved".
Despite flatly refusing to allow Beattie Varley to speak to the Herald, MBIE did act as an intermediary.
Cossar said MBIE contacted Beattie Varley who confirmed that "we have read the [NZ Herald] article and do not believe that it presents any information that would change the conclusions in our final report".
Neither Beattie Varley nor MBIE has seen the evidence held by the Herald - nor have they asked to see it, or other evidence.
Beattie Varley's conclusion about the $3m "design fee" appeared to hinge on the account of former Team New Zealand chief financial officer Greg Kemp, whose account to the forensic accountants appeared to be at odds with the emails published by the Herald.
MBIE also clarified that the investigation was not an attempt to investigate allegations made by the whistleblowers, but only to examine whether ACE was meeting the terms of the contract under which MBIE agreed to pay it up to $40m of public money.
"The process was run in a way that allowed Beattie Varley to get the information they needed to determine if 'ACE and ETNZ have complied with their respective obligations under [the Host Venue Agreement]'," Cossar said.
Initially MBIE appeared to suggest the report by Beattie Varley was an attempt to look into the whistleblowers' claims, rather than an examination of the terms of a contract.
"There were claims, we looked into it, the report's come back. I don't know how many other times we can point that out," MBIE media official Anthony Bull said in an interview in early September.
A copy of the allegations made by the whistleblowers was accidentally released to the media after ACE's lawyers, Lee Salmon Long, overlooked redacting it from court documents which were about to be released.
Meanwhile, the head of the Public Service Commission, a body which oversees behaviour in the public sector, has hinted it may become involved over MBIE's handling of the investigation into the audit.
"On the issues the Herald reported on Saturday 30 October, these are matters for the chief executive of MBIE to answer in the first instance," Peter Hughes, the Public Services Commissioner, said in a statement.
"It may then be appropriate for other authorities to become involved. That may include the Public Service Commission."
Hughes also revealed that a director of ACE - who he would not name - had approached the commission "about the actions of MBIE".
After meeting MBIE, Hughes said he had concluded he did need to take part any further.
Dalton said ACE "would welcome an independent review of MBIE's actions and process by the Public Service Commissioner or Ombudsman".