America’s Cup buffeted by fraud and spying allegations

New Zealand’s plans to host the 2021 America’s Cup are in disarray amid allegations of fraud, spying and a government decision to suspend funding for the world’s most famous yachting event.

Jacinda Ardern, New Zealand’s prime minister, insisted on Friday the contest for the oldest international sporting trophy would go ahead in Auckland in March despite a government investigation into claims about “structural and financial matters”.

“We are still committed to hosting a successful America’s Cup but we need to make sure the Ministry of Business and Innovation have the space to look into this properly,” said Ms Ardern.

Her comments followed publication of a leaked letter from government officials by the New Zealand Herald this week that raised concerns about a fraudulent transfer of funds to a Hungarian bank account as well as a NZ$3m ($2m) loan to Team New Zealand, which was allegedly “reclassified for other purposes”.

Wellington subsequently suspended payments to America’s Cup Events Limited, a subsidiary of Team New Zealand, the racing team that won the America’s Cup in Bermuda in 2017 and with it the right to host the 36th contest in 2021.

At least NZ$11m is being withheld pending the investigation for a competition that Auckland council and the government have allocated NZ$250m in public funds.

Grant Dalton, managing director of Team New Zealand, has denied claims of fraud and financial mismanagement. He said the team and organisers were the victims of spying and intentional reputational damage by people with questionable motives.

“It is a deliberate, sinister, and highly orchestrated attack which includes anonymous tip-offs, recordings and document leaks. ‘Informants’ orchestrate unfair accusations, bypassing normal processes, and going straight to external authorities,” he said.

Mr Dalton revealed this week the team had sacked a number of employees for leaking confidential information. He said his organisation had been infiltrated by spies.

Team New Zealand, which was the first non-US team to win and successfully defend the America’s Cup, admitted it was the victim of an email scam. That resulted in a payment to a fraudulent Hungarian bank account. Team New Zealand said that it immediately alerted the government and police.

It added that the NZ$3m in question was never classified as a “loan” and was a valid payment to the team in relation to the management of events.

Team New Zealand and America’s Cup Events were granted an interim High Court injunction to prevent the New Zealand Herald and Newstalk ZB on Thursday from publishing details of a government report into the spending of public money.

Mr Dalton defended the legal tactic, saying the initial, incomplete and leaked report would give a “competitive advantage” to the team’s challengers.

“As a team, all we want to do is defend this America’s Cup successfully in March 2021, and showcase to the world what an amazing country we have through a successfully run and broadcast event,” said Mr Dalton.

Tom Ehman, who has helped run former America’s Cup regattas and is chief executive of Sailing Illustrated magazine, said Mr Dalton made a mistake by putting himself in charge of Team New Zealand and the organisation of the event.

“Never before has any club that has run it ever had the same people running the event that is running the defending team. You always separated church and state.”

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