America's Cup whistleblowers face losing second contract due to dispute with Team New Zealand

Team New Zealand returning to their base after a day of training in the Waitamata Harbour in July. Photo / Dean Purcell.

Mayo & Calder, the contractors who turned whistleblowers against Team New Zealand and its event company, could face losing a second contract related to the international sailing regatta.

The challenger of record for the 36th running of the America's Cup - Circolo Della Vela Sicilia, which competes as Prada - has warned Mayo & Calder that it is undertaking a review that could see its contract terminated.

Mayo & Calder's work on the America's Cup match - due to take place next year - has already been axed, but the company had a separate agreement with the challenger of record for work on preliminary competitions, including the Prada Cup in which challengers will compete for the right to race Team New Zealand for the America's Cup.

In June, Team New Zealand chief executive Grant Dalton announced that he had expelled contractors he believed had been leaking sensitive information about the syndicate from America's Cup Event (ACE).

Operating within Team New Zealand's headquarters, with Dalton as its chief executive, ACE was awarded up to $40 million of taxpayers' money to administer next year's America's Cup.

It emerged that the Ministry of Business, Innovation and Employment (MBIE) had appointed forensic accountants Beattie Varley to investigate whether taxpayer money was being properly applied and whether record keeping within ACE and Team New Zealand would allow MBIE to meet its legislative requirements.

Beattie Varley's final report concluded that it had seen no evidence that ACE had misapplied event money from taxpayers.

But it also said poor record keeping by Team New Zealand meant the basis for payments between it and ACE could not be objectively verified, which "warrants criticism at a governance and management level".

Beattie Varley said it did not "necessarily" believe Team New Zealand's lack of records meant MBIE could not meet its obligations under the Public Finance Act.

Team New Zealand and ACE said the report represented vindication.

When Dalton - who is also chief executive of ACE - discovered Mayo & Calder had been supplying information to auditors he terminated its contract with the company.

Mayo & Calder's expulsion from ACE appears to have led to its troubles with the challenger of record.

The Herald understands that the challenger of record considers itself to be in an "invidious position".

Although it had not taken a position on the merits of the dispute between Mayo & Calder and ACE, the refusal of ACE to cooperate with the company meant Mayo & Calder was unable to provide the services it was contracted to.

As a result, three months after ACE cut ties with Mayo & Calder, the challenger of record has initiated a review of its contract with Mayo & Calder which could terminate the agreement because of a failure to perform contracted services.

Mayo & Calder declined to comment. Team New Zealand and Circolo Della Vela Sicilia have not responded to a request for comment.

In July, ACE won a High Court injunction preventing the Herald from revealing details of an earlier report from Beattie Varley.

ACE has initiated legal action against Mayo & Calder which includes claims of breach of confidence, and Mayo & Calder filed a counter claim, including a claim of wrongful termination of contract.

MBIE chief executive Carolyn Tremain has said that she has no reason to believe Mayo & Calder did not act in good faith in raising concerns with the ministry.

Court documents suggest Mayo & Calder's agreement with ACE was never documented.

The final Beattie Varley report revealed a number of ACE's agreements with third party providers "were not documented, or which operated verbally, or were still under negotiation" at the time of the probe.