The event organisers for the America's Cup say they back Grant Dalton and there have been no loans from the event to Emirates Team New Zealand.

Greg Horton, director of America's Cup Events (ACE), told the Herald ACE is "fully supportive" of Team NZ's Grant Dalton and his account of events around the fraudulent payment as outlined to Newstalk ZB's Mike Hosking this morning.

The Herald revealed this morning that Team NZ and America's Cup organisers are at the centre of an inquiry commissioned by the Crown over the spending of public money, including allegations of a "reclassified" $3 million loan and claims of fraud involving a Hungarian bank account.

The confidential June 22 letter written by the Ministry of Business, Innovation and Employment (MBIE) and the Auckland Council - and obtained by the Herald - reveals allegations around the handling of public money; the operation of the Cup itself and worries about public safety; and it lifts the lid on officials' concerns that the event organisers, America's Cup Events (ACE) and Team NZ, are in breach of obligations.

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Horton reiterated that Team NZ was defrauded by scammers, with a fake invoice resulting in the organisation paying money into a Hungarian bank account.

Team NZ's Grant Dalton told media the company was defrauded by a scam invoice. Photo / Photosport
Team NZ's Grant Dalton told media the company was defrauded by a scam invoice. Photo / Photosport

ACE has co-operated with a subsequent MBIE and police investigation.

"The police have been excellent and some funds have been recovered," Horton said.

MBIE raised concerns about a purported loan worth $3m from the event company to Team NZ, but Horton insisted there had been no such loan.

There was also a thinly veiled threat to withhold the next tranche of taxpayer funding, according to a confidential letter.

"There are no loans from ACE to ETNZ, and any withholding of funds by MBIE will not in any way affect the event.

"We are fully engaged with MBIE, and have extensively answered their queries over the last period, and more formally on Friday."

Team NZ hit back at concerns, saying the letter leaked to the Herald did not include a reply the organisations made last week.

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In a statement - accompanied by a letter responding to MBIE and Auckland Council - Team NZ said MBIE and the council should be satisfied that the syndicate and ACE were not in breach of their obligations of the hosting agreement for the event.

"ETNZ and ACE categorically deny any wrongdoing and consider that they have already addressed the concerns of MBIE and [Auckland] Council, and their adviser Beattie Varley," Team NZ said this afternoon.

The response confirms that $3m was paid to Team NZ. However the team did not consider this a loan, but payment for work that the team had done.

"It is a valid charge in relation to the management and delivery of the events for the significant time spent by ETNZ team members for event-related matters," they wrote.

"When analysed, that time is in fact in excess of $6m but has not been fully charged (and will not be fully charged) in order not to have a detrimental effect on ACE's budget.

"Further details of the time spent by ETNZ team members on event-related matters will be provided in due course.

"It is acknowledged that the $3m was assessed for work after the work was completed. But it had never been classified as a 'loan', and we would appreciate being provided with any documentation you hold from the whistleblower or the [informants] that categorises it as a loan.

"The money in question was actually paid directly by MBIE to ETNZ, and never even flowed through ACE's bank account."

New Zealand police have confirmed they're working with Hungarian authorities to investigate the scam.