Paul Lewis: Unpacking the sorry Team New Zealand America's Cup mess

Team New Zealand boss Grant Dalton. Photo / Photosport

OPINION:

So the Ministry of Business, Innovation & Employment (MBIE) called for Grant Dalton's head – but you wonder now whether some ministry heads might roll first.

That was the extreme to which this sorry mess between Team New Zealand and MBIE went, revealed in a pointed download of correspondence by TNZ director and lawyer Greg Horton this week.

It's to be hoped Team NZ's appeal for the Public Services Commission or the Ombudsman to step in is granted. Someone – anyone – please make this ugly tangle go away. Far away.

If the commission or the Ombudsman's office can't or won't do it, let's call in the heavy artillery – an official inquiry chaired by Willie Apiata or Sir Graham Henry or maybe the whole thing should be decided by a game of T20 cricket at Victoria Park.

That's how unimportant this really is and, in spite of a lot of huffing and puffing by various parties, the general public probably don't care much.

In theory they should because it involves taxpayers' money – even though a report by auditor Beattie Varley to MBIE found there was, in Horton's words, "no fraud, no improper loans, no money not accounted for and no financial impropriety". TNZ was so angered by a report inferring the Serious Fraud Office might get involved, they released Horton's correspondence showing the bad blood between MBIE (the America's Cup hosts) and the Defender.

TNZ said they would welcome an independent review of MBIE's actions and process by the Public Service Commissioner or Ombudsman— though I wish it would simply sink slowly beneath the waves, like a burial at sea.

Perhaps the most interesting element was MBIE's call for Grant Dalton's replacement, one of the factors which motivated Horton, in his correspondence, to say that he and others felt MBIE had "pre-determined" the outcome and that MBIE was treating TNZ as if they were "guilty until proved innocent".

Team New Zealand boss Grant Dalton. Photo / Photosport

If you're wondering, then, why TNZ blocked media access to publish documents relating to MBIE's audit of TNZ, it was likely because it would have been entirely one-sided. The allegations included potential misuse of taxpayer funds – but there was a whole, relevant saga behind the scenes which would not have been reflected.

Horton's statement this week has moved the needle on this dispute. Before that, the impression gained by the public, in my view, was probably that TNZ had done something wrong; there was room left to read between the lines and the air there had a faint whiff of "dodgy".

But Horton's correspondence and statement has put a different complexion on things:

•He says the whistleblowers went to MBIE with concerns in January. They had not and did not raise the allegations with anyone at TNZ or ACE (the America's Cup event arm).
•MBIE did not raise the allegations with TNZ until June. Horton wrote: "When after five months the allegations were finally put to us, we proved within weeks we were not guilty at all...We were considered guilty, and a punishment determined, all before the allegations were put to us."
•In those five months, somebody was taking secret tape recordings of TNZ board meetings and removing ACE and TNZ documents to without authorisation.
•TNZ submitted to an audit, as is MBIE's right as host – but did not know the basis on which it was being held nor what information had already been accessed by MBIE.
•Horton details an MBIE communications style which can only be described as high-handed, demanding quick responses from TNZ but being slow themselves, employing the phrase "we will reply in due course"; requested response times were missed, with partial responses when they were made, with emails and issues raised by TNZ going unanswered.

You can tell this has a bad smell because the politicians are washing their hands of it, saying it's a matter for TNZ and MBIE to sort out. It remains to be seen what happens over Horton's view that MBIE and the whistleblowers were "quietly and methodically building a case" against ACE and TNZ to "take away management of the America's Cup from ACE and TNZ" and assume that role themselves. Only the lawyers will benefit from any action taken over that.

MBIE can always say they were acting in defence of taxpayers' money – which is, and must be, subject to checks and balances. However, you'd have to say there was a better way to address the issue; you wonder if the government might quietly slip off the mooring ropes of a couple of individuals.

No one is saying TNZ is exempt. The auditors made special mention of the lack of timekeeping procedures to show the amount of time/people working on the $3m class design recharge by TNZ to ACE that is now the subject of mediation between TNZ and MBIE.

Horton said people on full-time salaries in the commercial world don't keep timesheets but you'd have to bet that, if there is ever any more government funding of TNZ, such steps will be taken in the future. In his statement, Horton said: "ACE and TNZ are not perfect and we do not pretend to be. But we are honest."

Mediation on the $3m recharge is expected to go ahead next month, with Horton making the point that it is a legal issue under the Host Venue Agreement whether it can be properly charged or not – "it is not an issue of any misdeed, impropriety or improper loan arrangement."