Inside the America’s Cup whistleblower court case that led to spying claims

America’s Cup whistleblower Grant Calder died of an apparent heart attack just weeks after a ruling that said delays in the looming trial in which he was involved would leave a “sword of Damocles” hanging over his head and the others who raised concerns over mismanagement of taxpayer funds.

Calder died on January 6, almost three years after he and business partner Tom Mayo took their concerns to the Government about how the America’s Cup defence was being run through companies led by Team New Zealand boss Grant Dalton.

Documents on the court file show the case is likely to dog Team New Zealand into the 2024 campaign after Justice Edwin Wylie said he would not tailor a court date to suit its sailing commitments.

It also suggests the claims made by Calder and Mayo as “whistleblowers” are set for a fresh hearing in a High Court. Their lawyers say the audit Dalton claimed as “vindication” failed to get to the heart of the allegations.

The detail has emerged from the High Court file of the court case, which came out of the relationship breakdown that grabbed headlines in 2020. The Herald was granted access to the court file which shows a trial date has yet to be set as the case approaches its third anniversary.

Calder and Mayo, their company Mayo & Calder Limited and the company accountant Michael Choy are being sued by America’s Cup Event Limited, which was set up to host the sailing extravaganza, and its associated company, trading as Emirates Team New Zealand.

It is claimed they breached confidentiality owed to America’s Cup Event Limited, that Choy should have detected the existence of an online scammer who was paid $2.8 million and that an “office expense” claim for a $1240 dinner at Prego restaurant on Ponsonby Rd in Auckland was “misleading and deceptive”.

Mayo & Calder and the three men denied the claim and counter-sued, saying their contract with America’s Cup Event Limited was unlawfully terminated and they were seeking the $1,149,999.84 they claimed was owed, along with damages for the impact on their business reputation and potential loss of future earnings.

The case was filed in 2020 during an unruly bust-up among those responsible for putting on the America’s Cup event which saw Calder and Mayo approach the Ministry of Business, Innovation and Employment with concerns about how taxpayer money was being handled.

Grant Calder and Tom Mayo were sued after disclosing information to the Government as "whistleblowers". Photo / Brett Phibbs

America’s Cup Event Limited was the company set up by Dalton and others to host the 2021 challenge in Auckland’s Waitematā Harbour, with taxpayers directly contributing $40m. The other company run by Dalton, Team New Zealand Limited, was responsible for running the sporting campaign for the defence of the Cup.

The approach by Calder and Mayo to MBIE led to an audit by forensic accountants Beattie Varley that identified a range of potential irregularities but ultimately left it to MBIE to decide if those fell outside its contract with America’s Cup Event Limited. Its sole definite finding was to level strong criticism at the company over its record-keeping.

The court file reveals that a court date had yet to be set for a trial, with a protracted wrangle between the parties over disclosure - the legal practice through which opposing parties can seek relevant evidence and information from each other.

As the case approached Christmas 2022, there was a further application by America’s Cup Event Limited and Team New Zealand around discovery and the costs relating to the court process.

Justice Wylie refused a request for a hearing on costs to be held, putting the matter off for the trial, and in a court minute issued on December 7, 2022 spoke of the need to move the case to a hearing while also wanting discovery to be resolved.

He said the plaintiffs’ lawyers had sought a trial date in 2025 “to suit their clients’ sailing commitments offshore”, while the defendants wanted the issue resolved.

Justice Wylie said he had “expressed some exasperation at the inordinate time it has taken to resolve discovery issues”.

He said he would not set a trial date for 2025 “just to suit their convenience and that if necessary, arrangements will have to be made for prospective witnesses to return to New Zealand or to take their evidence from overseas”.

“I pointed out that it is not appropriate to leave proceedings of this kind hanging over the heads of the defendants as some kind of sword of Damocles.”

Inside the court file

The unravelling of the relationship between America’s Cup Event Limited and Mayo & Calder is spelt out through dozens of documents on the court file.

Mayo & Calder had been hired in 2018 after an agreement was signed between MBIE, Auckland Council and Emirates Team New Zealand (ETNZ), as the representative for the defending Royal New Zealand Yacht Squadron, and America’s Cup Event Limited as ETNZ’s event management company.

The final agreement was signed on April 4, 2019, and saw a series of payments being made from MBIE to America’s Cup Event Limited to get the event under way.

Court documents show $2.8m of that money was paid to an unknown figure described in court documents as “The Scammer”, who had approached Dalton pretending to be a representative of a German media company hired to produce coverage of the Cup.

The email address used by The Scammer to approach Dalton had one letter altered from the email address used by the genuine representative of the German company. Through the falsified email address, The Scammer sent Dalton new bank account details for receipt of an upcoming payment.

Court records show Dalton sent the email to Choy to advise Kiwibank of the new details and a month later instructed that payment be made when the actual invoice turned up. It meant the $2.8m intended to pay the contract went into the bank account provided by The Scammer. The fraud was discovered two months later in early December 2019.

Team NZ head Grant Dalton. Photo / Michael Craig

As 2020 approached, court documents showed Calder and Mayo had developed concerns over how America’s Cup Event Limited was operating. A letter from their lawyers to those acting for America’s Cup Event Limited later said “our Clients became concerned about possible misuse of moneys provided under the (contract with MBIE and Auckland Council). They sought legal advice as to the appropriate steps to take.”

In February 2020, those concerns were raised with MBIE on a confidential and limited basis. MBIE hired Beattie Varley to carry out an audit and the forensic accounting firm spoke a month later with Calder and Mayo.

From then through to June, Calder and Mayo continued working in America’s Cup Event Limited offices as the company became increasingly aware the auditors’ interest was more than routine.

America’s Cup Event Limited in-house legal adviser Russell Green, in an affidavit, said the company had been concerned confidential information was circulating. “Certain things did not add up and the history of spying and espionage associated with the America’s Cup is well-known.” The release of any confidential material - whether financial- or sailing-related - “can give other teams a significant commercial and competitive advantage”.

It was a discovery that led the company to take a “strict and legalistic view” of what it was obliged to provide Beattie Varley, said Green. He said the requests became “unusually comprehensive and burdensome” - particularly with Covid-19 lockdowns - and the company believed it was being asked to do more than it was contractually obliged to amid heightened concerns about its confidential information.

It fell apart in June 2020 when the interim (or draft) Beattie Varley report was completed and circulated among interested parties.

The interim report from Beattie Varley “confirmed our suspicion” information was being copied and provided to others. He said it was clear also that internal meetings had been recorded. “We were shocked.”

Green said it was only when the allegations emerged through the interim report that it realised the serious nature of the claims being made and it “set about providing Beattie Varley with all the information it required” and giving detailed answers to questions.

“We were surprised by the allegations, which were based on out-of-context information, were untrue, and were readily able to be disproven.”

Court records show Calder and Mayo left America’s Cup Event Limited’s office on June 22 and were out of contact for a week.

On June 29, their contract with the event management company was cancelled - the same day news broke through media that a contractor had been sacked on suspicion of leaks of information from inside the company.

Nothing was made public as to who that contractor was, but in Green’s affidavit, written months later, he said it had become clear Mayo & Calder and those who made up the company were the whistleblowers.

It also became public that information had been provided to MBIE and that it was investigating.

‘Spies’ and the leak

The following day, media coverage raised the spectre of “spies” inside Team NZ’s headquarters and Dalton appeared to consider the prospect of a “plant” aimed at uncovering secrets.

It also saw media entering a space that would become a focal point for the legal case to come. NewstalkZB’s Heather du Plessis Allan, according to court documents, texted an America’s Cup Event Limited representative saying she had seen “chunks” of the interim report.

The potential emergence into the public sphere of the incomplete report saw the first court action, with America’s Cup Event Limited seeking and receiving an injunction to halt publication on the basis it contained confidential information.

Green’s affidavit said he did not know how NewstalkZB had obtained the document but stated that Calder had a copy, as did Mayo & Calder’s PR company Sherson Willis (which had denied disclosing any information). And, he said, Calder and Mayo had made “extremely serious allegations” against the Cup companies which could have led to the loss of the right to run the event.

In the meantime, said Green, Mayo & Calder had positioned itself as the “Event Delivery Partner” and was “actively lobbying” MBIE to assist them in continuing in that role. He added that he believed “they would have been assisted by efforts to continue to damage ACE and ETNZ through the media”.

In a letter that day, Mayo & Calder’s lawyers told America’s Cup Event Limited’s lawyers their client had provided information only to MBIE.

“Our clients hope that the concerns they have raised are not borne out, as it would be tragic if your clients have taken government money for the event and applied it to the defence in breach of the (contract), potentially wasted millions of dollars of taxpayers’ money on payments to fraudsters and to German-based television companies without contracts being in place, and utilised public funds for the personal benefit of persons associated with ACE and ETNZ.”

Legal action followed, with a suit filed with the High Court at Auckland by America’s Cup Event Limited on July 21. The legal action would not become public for another month.

The Statement of Claim made out four causes of action - the claim that Choy should have picked up the false email address used to contact Dalton which led to $2.8m being lost to The Scammer.

Emirates Team New Zealand's AC75 Te Rehutai returns from training on Auckland's Waitemata Harbour in January 2021. Photo / Photosport

It also claimed Mayo & Calder or those in it had engaged in “misleading and deceptive” conduct putting a $1240 dinner at which those involved in organising the Cup were present as “office expenses” and that the invoice breached Mayo & Calder’s obligation to not obtain “secret profit”. It also alleged a breach of confidentiality.

August 2020 saw the release of the summary of the Beattie Varley report, which directly criticised America’s Cup Event Limited on one point around the record-keeping of the flow of expenses and money back and forth between it and its related ETNZ.

“The failure to maintain a contemporaneous and documented record that would allow objective verification warrants criticism at a governance and management level. It attracts an increased criticism given ACE’s Event costs are funded to a significant amount by taxpayers,” it said.

The detail of the report, which would not emerge until months later, did not broaden direct criticism beyond that point but raised a range of questions around the management and systems used by the company. In those areas, it described the issues as subject to an interpretation of the contract between the companies Dalton operated and MBIE, and left it to the government agency to take it further, if it considered it should do.

Green’s affidavit stated that the final report, released on August 20 2020, found “none of the serious allegations made against ACE, ETNZ and their officers and staff were made out” and there was “no financial impropriety or misappropriation of funds”.

Meanwhile, news of the legal action began to emerge as Mayo & Calder’s defence to the claim it faced was lodged with the court along with a counter-claim. In that, it sought a declaration its engagement with America’s Cup Event Limited had been unlawfully terminated and that they wanted $1.15m in lost earnings plus damages.

It was the events that followed that would become a consistent focus of the court case for America’s Cup Event Limited and ETNZ during the next two years.

Then came the exposes

In October 2020, Herald Wellington business editor Hamish Rutherford began to publish a series of exposes. They included lengthy quotes from emails written by Dalton and references to terms used inside company meetings which were meant to be confidential.

Green spoke of content from company meetings finding its way to the NZ Herald, saying Rutherford - now National leader Chris Luxon’s chief press secretary - quoted information that would not have been possible without access to the recording or a transcript of it, or without access to the documents or someone with knowledge of their contents.

“I am not aware of anyone else who had those documents other than the defendants,” he said.

America’s Cup Event Limited lawyer David Bullock of Lee Salmon Long wrote to Mayo & Calder’s lawyers: “It is now clear that journalists are being fed specific details and information that is either false or subject to obligations of confidence.”

He said journalists whose content “mirrors language” in legal proceedings had been “put on notice” and “your clients (or some of them) are the only likely sources to have provided this information”.

While Mayo & Calder had denied any leaks, as Green acknowledged in his affidavit, he said Rutherford’s questions included details that raised concerns. That included reference to Dalton talking about a “need to ‘boogie’ numbers” when discussing how accounts were to be split between ACE and Team New Zealand and that some shared administrative costs were also “a boogie” but were “more real” than others.

Team New Zealand boss Grant Dalton and then-Prime Minister Jacinda Ardern pictured in 2019. Photo / Jason Oxenham

Green presented evidence of an audio recording from November 2019 he said had links to the defendants’ lawyers, on which he said Choy’s voice appeared to sound closest to the recording device. He said it contained “five instances of Mr Dalton using the word ‘boogie’”.

In a second instance, Green highlighted an article by Rutherford which quoted from a number of emails including one in which Dalton said: “I would rather staple my c*** to a burning building (than) attend a Health and Safety briefing - are you kidding me, that would be the most f****** boring arse-covering load of mind-numbing bollocks ever invented.”

Green said it was an email from April 30, 2019, sent from Dalton to America’s Cup Event Limited director Symmans, to which Mayo and Calder were copied. He quoted additional emails also relied on by Rutherford in Herald articles, to which Mayo and Calder had also been copied, among others.

Green said in his view - having ruled out others as potential sources - the defendants were the likely source of the email leaks.

In a December 3, 2020, affidavit, Calder listed those who had access to the information - the lawyers involved, MBIE, Beattie Varley and the Serious Fraud Office. He said Sherson Willis had limited documents, as did an insurance company.

“Media reports, and the disclosures made publicly by ACE director Greg Horton, also indicate that the media also has access to some of the alleged ‘confidential and proprietary information’. I also understand all other workers at the ACE office to have had access to the same.”

The shape of each side’s case became clear as the case entered into the discovery process. It is a process through which competing sides in a court case seek information from the other that is relevant to the case. It is intended to create an open-handed, equitable position for all parties when a trial gets under way.

While those running or defending the Cup sought information related to the disclosure of confidential information that was appearing in the media, Mayo & Calder sought to extract information related to its initial concerns related to MBIE.

In a 2021 letter, lawyers acting for Mayo, Calder and Choy told America’s Cup Event Limited it wanted it to disclose information about allegations of wrongdoing including “misuse of public money” and “failure to adequately plan and implement health and safety requirements for the America’s Cup event”.

In court documents, it is shown they sought “operational documents for the America’s Cup Event, including travel records, expense spreadsheets” and structural details about internal IT and company processes.

Mayo & Calder also sought information held about two specific events that had become a feature of the court case - the $2.8m scammed out of America’s Cup Event Limited accounts by a fraudster who had emailed Dalton pretending to be its German broadcast partner, and the $1240 spent at Prego which had been claimed as an office expense.

When America’s Cup Event Limited’s lawyer said travel records and expenses were not relevant, Minter Ellison Rudd Watts lawyers Aaron Lloyd and Julian Spring responded, saying they were a clear focus in the case as “expenses were routinely claimed by Mr Dalton and others in your clients’ organisation, including for 5-star overseas hotels”.

“Our clients’ protected disclosure to MBIE raised the issue of inappropriately claimed travel expenses by Mr Dalton,” the letter said, adding it was “not credible” to rule it out.

Case does not ‘turn on the truth’

Lee Salmon Long lawyer David Bullock rejected the claim, saying “whether your clients had a proper basis for making disclosures and allegations does not turn on the truth or otherwise (of) those allegations”.

“Your clients cannot now attempt to create a foundation for disclosures that did not exist at the time those disclosures were made. Rather, that turns on what was known to your clients at the relevant time.”

Bullock said America’s Cup Event Limited was concerned Mayo & Calder were trying to “engage in a fishing exercise” aimed at “some effort to improperly litigate the substance of their complaints” which had been rejected by independent auditors.

Mayo & Calder’s lawyers - Lloyd and Spring - responded that its clients “have already caught several fish” and had pleaded in its case against America’s Cup Event Limited “allegations about your client’s conduct which have been investigated by MBIE” and was entitled to discover “if these are one-off issues or if there are further instances”.

“The apparent attempt by your clients to argue that these issues have been examined and resolved is seen in a dim light by our clients given that the scope of the auditors’ role was limited to whether contractual breaches had occurred.”

The tussle over discovery - whether each side should or had provided what was sought - stretched out through 2021 and up to July 2022, which was intended to be the next substantive date in the case.

In the lead-up to that date, both parties accused the other of not meeting their discovery obligations.

Lawyers for America’s Cup Event Limited raised what it believed to be gaps in discovery and raised concerns about whether Mayo & Calder’s search for relevant documents included external contractors.

In response, Mayo & Calder’s lawyers said more than 30,000 documents had been produced which included contractors’ information. It claimed America’s Cup Event Limited had produced only 370 documents and that “whole categories of documents have clearly been ignored by your clients”.

Among information it alleged was missing were text messages between Dalton and Symmans about the $2.8m fraud and the function at Prego, even though “both were prolific users of text messaging”.

It also alleged discovery was absent a report from America’s Cup Event Limited senior adviser Richard Lindroos “which suggested removing Ms Symmans as a chair of (America’s Cup Event Ltd) and asking Mr Dalton to step aside”.

Mayo & Calder also complained that the final investigation report by Beattie Varley into its claims had also not been produced, to which America’s Cup Event Limited lawyers responded that it was out of scope and “irrelevant in any event because the truth or otherwise of the underlying allegations made by your clients are not relevant to any matter at issue in the proceeding”.

The letter from the America’s Cup Event Limited lawyers said there were no relevant text messages but did agree to provide reports from Lindroos.

By July 2022, the scrap over discovery escalated with America’s Cup Event Limted and Team New Zealand seeking a legal order to obtain further documents from those it was suing.

In an August 2022 affidavit from Calder - his final word in the case before his death - he said that there was nothing relevant left to provide. Rather, he claimed, the pursuit of fresh legal orders was “to put us to further cost and to delay defending this proceeding, rather than for any legitimate purpose”.

Grant Calder died at 41.

He wrote: “All that the Mayo & Calder defendants want is for this matter to progress to a trial so that our claims against the plaintiffs can be heard (as they are strong) and that the claims which the plaintiffs have asserted against us can be dismissed (as they are very weak and importantly will not require extensive amount of documents to be determined).”

On January 6, the case took a tragic turn with Calder’s sudden death. In a court filing on January 27, Justice Wylie described it as an “apparent heart attack” and set fresh, delayed deadlines for response to the questions and to determine how the case would continue through his estate.

The next America’s Cup defence begins next year - likely about when a trial would eventually be held at the High Court in Auckland.

A number of likely witnesses - particularly Dalton - will be involved in the defence of the America’s Cup, which Team NZ successfully retained in 2021 after all the colourful and explosive headlines of the year before.

The 2021 defence was based out of the Viaduct on Auckland’s waterfront. From there, it’s a brisk 20-minute walk to the High Court.

But Team New Zealand and the Royal New Zealand Yacht Squadron turned their backs on Auckland after their successful defence and opted to hold the 2024 Cup challenge in Barcelona.

Those called to testify will have further to travel and a contest to fight that is quite different to that under wind and sail on the Mediterranean, in a defence of the Cup haunted by ghosts of challenges past.