Team New Zealand cleared by America's Cup funding probe

Team New Zealand and support boats set out on a training run. Photo / Michael Craig

The Government says a report into Team New Zealand has cleared the team of misappropriating public funds, as a dispute over a $3 million design fee continues.

Yesterday afternoon Team New Zealand, the Ministry of Business, Innovation and Employment (MBIE) and Auckland Council issued a joint statement saying a report by forensic accountants Beattie Varley found there was "no financial impropriety of any nature".

The statement also indicated that the report showed there was no loan between Team New Zealand and its event company America's Cup Event (ACE) nor was there fraud by either company.

The personal expenses of the team's chief executive Grant Dalton — or any other personnel — had not been paid from Crown money.

A summary of Beattie Varley's report — all that has been released so far — said Team New Zealand's record-keeping "warrants criticism at a governance and management level".

It also revealed that Team New Zealand was in dispute with MBIE over the way the team charged ACE $3m to design the boats for next year's regatta. Beattie Varley said Team New Zealand's record keeping meant it could not verify how the team had calculated the fee which was being charged to taxpayers.

"The lack of an appropriate time-recording system within [Team New Zealand] prevented any objective verification of the amount that was ultimately recharged to ACE."

The Herald is prevented from revealing details from an earlier report by Beattie Varley after Team New Zealand was granted a High Court injunction blocking publication.

In July the Herald revealed that MBIE was sufficiently concerned about the financial affairs of the team that it had asked Beattie Varley, headed by former Serious Fraud Office officials, to investigate.

Grant Dalton says he is not relieved because he was always confident the team would be cleared. Photo / Photosport

While Dalton initially said the team had discovered and expelled "spies" from within the team, it would later emerge that staff from event organising company Mayo & Calder had taken their concerns to MBIE and were acting as whistleblowers.

A letter from MBIE chief executive Carolyn Tremain raised questions both about the design fee, but also the loss of funds by the team into a Hungarian bank account due to fraud.

Beattie Varley's report says whether the $2.8m lost to Hungarian fraudsters was a breach of Team New Zealand's agreement with MBIE and Auckland Council "then it was not an intentional one".

It added that Team New Zealand did not expect the cost of the fraud to fall on taxpayers.

Previously MBIE has refused to say whether Team NZ's record keeping was allowing it to discharge its duties under the Public Finance Act.

Beattie Varley said this was a matter for MBIE to determine.

"We do not believe that ETNZ's failure to maintain a system allowing objective verification of time-recharged (and ACE's acceptance of that failure when it paid ETNZ) necessarily prevents the Crown from meeting its obligations under the Public Finance Act but we refer the matter back to MBIE for consideration."

Tremain refused to be interviewed last night. MBIE has not said when it will release the rest of the Beattie Varley report.

In a statement, Tremain said: "While it's excellent to confirm that there has been no financial impropriety and the escalation process has concluded, the Beattie Varley report had raised some concerns around record keeping relating to several historical matters."

MBIE said that the issue with the "third party fraud that ACE/ETNZ had been victim of" has been "satisfactorily resolved" from its perspective and that the Government agency was satisfied that any loss as a result of this scam won't be paid for by any Crown investment.

She maintained that MBIE had "a different view" to Team New Zealand about the $3m design fee.

In their joint statement, the parties said they had agreed to go to mediation on this issue.

Team New Zealand's chairman Sir Stephen Tindall, the founder of The Warehouse, said: "We are pleased to have this behind us and ACE can now focus on putting on a great spectacle, and ETNZ on keeping the Cup in New Zealand."

Dalton has always described the allegations as baseless. Last night he said he was vindicated, adding that he was not relieved because he was always confident the team would be cleared.

Auckland Mayor Phil Goff told the Herald that while there are still areas of disagreement between the host and Emirates Team NZ in terms of the nature what's being organised, serious allegations that would have done damage to the event have now been found "not to have substance".

Last night there were reports that Team NZ had now launched legal action against Mayo & Calder.