NZ AC Dope

AC Dope

Team New Zealand failed to provide information required as part of its $36 million deal with the Government for more than a year, a Sunday Star-Times investigation has found. And it took the Ministry of Economic Development that long to do anything about the apparent breach of the funding deal – finally sending an email to the yachting team saying “we haven’t received any quarterly reports from you in quite a while”.

Team boss Grant Dalton apologised in an email, but complained that earlier reports “just seemed to disappear into a black hole”.

The emails form part of hundreds of pages of documents released under the Official Information Act. We asked for financial information provided by Team NZ to the Government after sources close to the team told us they had concerns over a lack of accountability over how the money was being spent.

“So many people are asking these questions. There’s no accountability, no transparency around the public money,” an America’s Cup veteran said. “Questions need to be asked of the Government – you provided the money, what accountability is there?”

The Ministry of Economic Development released cabinet briefing papers and the agreements signed between the Government and Team NZ, but very little financial information. The team's agreement with the Government has a clause stating it must be prepared to be audited, but no audit has been carried out. At least $14m of the $36m has been released.

The America's Cup will be held in San Francisco in September and it is likely to be New Zealand's last chance to win back the cup. Dalton said in a television interview in February that the event had become "ridiculously out of control, expensive" and that "billionaires' egos" were being allowed to set the criteria.

Green Party co-leader Russel Norman said the Government's oversight of the money was "disgraceful" and "extraordinary" and it had failed to implement basic accountability measures for the use of $36m of taxpayer money.

He was scathing of the year-long gap in providing information.
"On the face of it, it's a clear breach of the agreement. I think we can say Government was asleep at the tiller."

The Government's "strategic partnership agreement" with Team NZ says it must provide the ministry with an accurate and complete report on all the areas set out in an eight-page reporting template, including a summary of all its activities that utilised Government money and a report on expenditure against budget, within 30 days of the end of every quarter.

On October 14, 2011, an MED staff member, whose name was withheld, contacted Dalton, informing him that the required paperwork had not been completed for 13 months, meaning at least three missed reports.

The documentation was needed to authorise the release of Crown payments - though Team NZ received the payments anyway.

Dalton wrote back: "Sorry about no reports, they just seemed to disappear into a black hole and we have never heard a word since the first one we did for Roger all that long time ago. Anyway, we will fill one out and send it on beginning of next week."

In response to Star-Times questions about the lack of information provided, the ministry said on Friday it now had up to date reports covering the period from January 2010, when the agreement with Team NZ was updated, and any delays in reporting were an "administrative oversight".

The ministry had stayed in regular telephone contact with Team NZ during the period in question and no issues were raised that required action. Two payments were made during that time.

The ministry said quarterly reporting expectations were separate from instalment payment requirements. Team NZ met its contractual requirements prior to payment, which included showing evidence of raising $2 of sponsorship for every $1 of government funding.

Dalton said yesterday the basis of the drawdown of funds was showing proof of sponsorship money. "Team NZ is not aware of any issues outstanding through the time you describe."

"Clearly it's both sides. The Government, at the end of the day, is in the position of allocating money and could have insisted on proper accountability mechanisms, but, because they're asleep at the tiller, they didn't."

Economic Development Minister Steven Joyce said officials had told him that under the agreement, funding instalments were solely dependent on the level of sponsorship raised, not the performance reporting.

This appears to be at odds with the papers released to the Star-Times, and Joyce said he would be asking officials for a full report on accountability to date and taking further action if required.
He revealed that the Government had looked at whether it could get out of its contract with Team NZ, which had been signed by the Labour Government at a time when "money was thought to grow on trees".

Labour's former minister for the America's Cup, Trevor Mallard, who first signed the strategic partnership agreement, remains convinced it was a good deal. "It's my understanding now that all the income targets have been met and as a result of that the grant would have been more than paid back in PAYE and GST.

"I think a lot of people think ‘shit, 30 million bucks that's an enormous amount of money and it's all going one way', whereas the whole basis of the agreement . . . and the reason for phasing the payments to them was they had to meet other income targets and be based in New Zealand and a whole pile of other things which were designed to result in the taxpayer being net better off."