Te Kahu testing in the Rangitoto Channel. Photo / Emirates Team NZ
Te Kahu testing in the Rangitoto Channel. Photo / Emirates Team NZ
Team New Zealand boss Grant Dalton knew millions of dollars - later discovered lost to fraud - was destined for a Hungarian bank account, unwittingly emailing a scammer that it "makes no difference to us where it's paid".
Details of the scam which cost the America's Cup holders more than$2.8 million are revealed in court documents of a legal dispute between America's Cup Event Limited and Mayo & Calder.
America's Cup Event (ACE) is the event company which sits alongside Emirates Team New Zealand. ACE is being given up to $40 million of taxpayer cash to host next year's regatta. Dalton is chief executive of both companies.
Mayo & Calder were previously contractors to ACE. In the documents, Mayo & Calder acknowledge that the principals of the company have been acting as whistleblowers, providing information to the Ministry of Business, Innovation and Employment.
In the documents, ACE is seeking $2,813,928.95 from Mayo & Calder, its principals Grant Calder and Thomas Mayo as well as Michael Choy, an accountant who works at Mayo & Calder.
A statement of claim filed in the High Court in Auckland in July details how the Hungarian fraud took place.
Circle-O, a joint venture of two companies based in Germany and Austria were contracted to provide "media production services" for next year's regatta as well as deliver a race management system.
ACE reveals that the managing director of Circle-O, Juergen Eckstein, wrote to Dalton in May 2019 indicating invoices were due to be issued on July 1 and October 1.
In July 2019 a scammer using a very similar email address to Eckstein (spelling circle as clrcle) wrote to Dalton asking about the July invoice, which had already been paid.
Believing the email was asking about the October invoice, Dalton responded that it would be paid after September 30 "when ACE was due to receive further government funding", the statement of claim says.
Dalton has consistently denied the money lost in the fraud was taxpayers' money.
In September, the scammer emailed Dalton saying that Circle-O had set up a new bank account in Hungary, asking for the money to be paid there. Dalton responded that it "makes no difference to us where it's paid, so not a problem".
Choy, who was copied into the emails between Dalton and the scammer, would later email Kiwibank asking them to update Circle-O's bank account details. He and an ACE employee, Stephanie Stubbs, signed an international money transfer request.
Later, Choy instructed two Kiwibank staff to transfer EURO1,600,000 into the bank account which had been provided by the scammer, which ACE believed belonged to Circle-O.
The statement of claim says Choy failed to detect the fraud, and was negligent on account of his "extensive experience in accounting and finance management", his responsibility for ACE's accounts and his failure to take steps which would have identified the fraud.
Mayo & Calder's statement of defence, meanwhile, denied that Choy was responsible for managing ACE's bank accounts, nor did he provide fraud detection services.
Team New Zealand boss Grant Dalton. Photo / Getty Images
Dalton was by his own admission solely responsible for approving payments, the response says, adding that in the case in question all of the steps taken were at Dalton's direction, while Stubbs held a more senior finance role than Choy.
"Grant Dalton, as CEO of ACE and Team New Zealand Limited, assumed sole authority and decision-making power to authorise the payment of invoices and confirmed the same directly" to Choy.
Mayo & Calder cited an email from Dalton to Choy on June 24 this year, advising him: "I must be missing something, not 1 cent gets spent without my sign off. Dalts."
The documents also reveal that ACE claims that Mayo & Calder owes ACE $1,240.49 for a claim that was filed as "offices expenses" which was in fact for a dinner for Mayo & Calder and ACE staff to hold a function at Ponsonby restaurant Prego on December 17, 2019.
ACE argues the claim was "misleading and deceptive".
Mayo & Calder responded that the event was meant to be held at the Royal New Zealand Yacht Squadron but the venue was overbooked. Instead, ACE decided to move the function to Prego as it was "the favourite restaurant of ACE director Tina Symmans".
The statement of defence filed by Mayo & Calder alleges there was "no clear process within ACE for claiming expenses" but that expense claims were routine in the organisation, including for Dalton.
In any case, Mayo & Calder write, ACE knew exactly what the claim was for. "It was for a function hosted and attended by ACE staff; a receipt for the function was attached to the invoice; and ACE's director, Tina Symmans, approved the invoice."
