Surely Emirates Team NZ's directors will direct CEO Grant Dalton to step down from his joint role as boss of the America's Cup events arm to concentrate on his prime role of winning the Cup?
There's been a great deal of bluster from Dalton since a carefully negotiated press statement landed on Wednesday. That joint statement from MBIE, Auckland Council, Emirates Team NZ (ETNZ) and America's Cup Event (ACE) said an investigation had found there was no evidence of financial impropriety or misappropriation of $40 million in taxpayer funds towards hosting the America's Cup event.
MBIE had called in forensic investigators Gib Beattie and David Osborn this year to look into a whistleblower complaint lodged by Mayo & Calder, which had previously been contracted by ACE to manage the event.
When Newstalk ZB's Mike Hosking later asked Dalton if the investigation had been a needless waste of time and energy, he replied: "We're totally vindicated and, yes, it's been a huge strain on people within the organisation to sort this out and put it behind us.
"There are certainly questions that still need answering, how it was allowed to get to this point ... we suspected something as far back as December last year was going on.
"At that point we didn't know what it was," said Dalton.
But not so quick, here. The final Beattie Varley report has yet to be released. But a summary of that report, which accompanied the Wednesday statement, should make for careful reading by the directors of both ETNZ and ACE.
It reveals ACE took a high-handed attitude to the investigation. Records were initially produced then access was cut off with ACE saying it would deal directly with officials instead. There was more.
It wasn't until a draft report was produced in June that access was restored, ultimately leading to a meeting with ACE's directors, Tina Symanns and Greg Horton, and Dalton.
Beattie Varley identified a lack of an appropriate time-recording system within ETNZ which prevented any "objective verification" of a $3m amount that was ultimately recharged to ACE in respect of "AC36 Event and Class Design".
"The failure to maintain a contemporaneous and documented record that would allow objective verification warrants criticism at a governance and management level," says the Beattie Varley summary. "It attracts an increased criticism given ACE's Event costs are funded to a significant amount by the taxpayers."
This was surely sufficient of a serve to warrant an appropriate response from the boards of ACE and ETNZ. But there was no acknowledgement of this by ACE or ETNZ in Wednesday's statement. All ETNZ chair Sir Stephen Tindall said was that they were "pleased to have put this behind us and ACE can now focus on putting on a great spectacle and ETNZ on keeping the Cup in New Zealand."
But surely this level of management sloppiness was not contemplated when in September 2018 ETNZ announced it had formed a separate company to run the 2021 America's Cup in Auckland. Symmans, who had been an ETNZ director, was announced as ACE chair. She was joined by Horton as the sole directors of ACE. The announcement said they were both "effectively resigning from their team-related directorships".
As Symmans said then, "one of the real challenges we have is making sure we separate the work on the event from the team so they can focus on defending the Cup."
Having a joint CEO for both companies surely runs counter to this purpose.
Symmans has not responded publicly to Beattie Varley's exposure of how ACE tried to stonewall the investigation. But given public money is at stake, explanations are not only justified but required.
The Beattie Varley summary report discloses:
• Their investigation was focused on whether ACE had met its obligations under a 2019 host venue agreement (HVA) entered into by ACE, ETNZ, Auckland City Council and MBIE under which the latter committed $40m for the event.
• MBIE commissioned Beattie Varley's audit investigation after a whistleblower expressed serious concerns with various operational and governance matters within ACE.
• ACE provided a first tranche of documents on April 20. But on June 9, ACE wrote saying it had provided considerable information but was now "going to return to its full programme". It invited the investigators to submit an audit report to MBIE and advised it would discuss any remaining matters of concern directly with the officials.
• The upshot was that Beattie Varley could not pursue further documents. Nor could they seek explanations from ACE/ETNZ personnel. It also affected their ability to assess information received from the whistleblower against that provided from the events arm, they said.
After Beattie Varley's draft audit report was filed on June 20, ACE acknowledged its approach had been "unhelpful" and that more full disclosure would have helped address concerns. On July 20, more information was produced. Beattie Varley met with the ACE directors and the CEO on August 11.
In their summary report, Beattie Varley say that had they received the information they had sought in April or May, they would "not have needed to raise many of the issues detailed in the interim report".
The Beattie Varley summary discloses that under the host venue agreement, ACE and ETNZ not only have to keep true and accurate records, but also permit the Crown or its agents to access their premises, personnel and records to verify they have completed their obligations.
The key outstanding issue is whether ETNZ should have recharged the $3m sum to ACE. ACE's position is that the costs arose within the management and delivery of the event. In turn, MBIE says the expense was not contemplated when the HVA was signed.
This is now subject to mediation. In my view there should be no room for debate.
It is arguable that Dalton brought much of the recent publicity down on his own head by failing to ensure compliance in a timely fashion with the Beattie Varley investigation.
This is not simply a management issue. During this time with Covid-19 putting a strain on taxpayer finances, ACE's board is also obliged to carefully account for how the $40m of direct Government funding is being applied.
This episode should provoke Symmans (and Sir Stephen) to make good on ACE's original goal to separate the work of the team from running the Cup.
Having a joint CEO — whose skill is really needed helping drive the team to a victory — does not cut it.