Team New Zealand and the Ministry of Business Innovation and Employment went to mediation and have now settled the dispute. Video / Will Trafford
Team New Zealand is fighting to prevent the Herald from publishing details of a report by forensic accountants, which the yachting syndicate's lawyer claims contains "scandalous allegations".
A legal battle this afternoon in the High Court at Auckland involved Emirates Team New Zealand (ETNZ), America's Cup Event Ltd (ACE), the New Zealand Herald's publisher NZME, the Government and Auckland Council.
Last week, ACE and ETNZ obtained an interim High Court injunction order against NZME to prevent the media company publishing or broadcasting details of a leaked report by forensic accountants Beattie Varley about recordkeeping and use of public funds allegations.
NZME is arguing to have the injunction order overturned on the grounds of public interest.
After being granted the injunction last week, ETNZ boss Grant Dalton emailed his lawyers and said "nice lads". NZME was copied into the email.
Lawyer Davey Salmon, who represented ETNZ and ACE, said his clients had "absolutely no idea of the scandalous allegations" until they received the Beattie Varley report.
He said if published, the report risked "serious reputational damage" to individuals which may never be repaired.
Some details in the report were protected by the Privacy Act and also contained potentially defamatory claims, Salmon argued.
Along with commercially sensitive information, Salmon continued, the material contained in the report was also sensitive on a sporting level - such as team salaries.
Team NZ and ACE's lawyer Davey Salmon argues during the hearing. Photo / Peter Meecham
The America's Cup, he said, was known for having allegations of leaks and spies and "knowing anything about a competitor's financial strategy is just dynamite".
"It won't help the public to know what's actually happened [by hearing] unreliable allegations," he said, arguing for the Beattie Varley report to remain hidden.
He said once the "genie was let out of the bottle, there is no putting it back".
But barrister Robert Stewart, representing NZME, said the allegations levelled in the Beattie Varley report were of a high public interest.
He argued this outweighed any harm to individuals.
"The fact that this relates to public funds is of extreme significance," he said.
"NZME doesn't want to jeopardise New Zealand's defence of the America's Cup but it does want accountability of the use of public funds."
NZME's lawyer Robert Stewart said the allegations were of a high public interest. Photo / Peter Meecham
Former solicitor-general Michael Heron QC, arguing on behalf of the Ministry of Business, Innovation and Employment (MBIE) and Auckland Council, said the Beattie Varley report is "confidential and is not intended for publication".
He said it was an interim report which wasn't intended for disclosure outside of the parties. He indicated a final report would likely be made public.
After hearing the nearly three-hour debate, Justice Simon Moore reserved his decision, which will be delivered in writing at a later date.
The interim injunction orders will remain until his judgment.
Salmon indicated if Justice Moore's decision went against his clients an appeal was likely.
MBIE has earlier confirmed it suspended public funding for the 36th America's Cup - due to be held in Auckland next year.
It said $40 million has been set aside for the event fee and, to date, $29m has been paid to ACE in line with contractual funding milestones.
"While Crown and Council work through this process regarding the claims made relating to the organisation of the 36th America's Cup, we are not intending to make further payments to America's Cup Events Limited (ACE)," MBIE's general manager for tourism Iain Cossar said.
"This will be revisited pending the outcome of the process."
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The suspension of public funding came after allegations emerged involving ETNZ and America's Cup organisers and an inquiry was commissioned by the Crown over the spending of public money, including claims of a "reclassified" $3m loan and of fraud involving a Hungarian bank account.
Dalton has said the allegations are "a deliberate, sinister, and highly orchestrated attack which includes anonymous tip-offs, recordings and document leaks."
Some of the claims have been leaked to the Herald, which Dalton said has created a "kangaroo court trial".
Dalton has also claimed "spies" were caught leaking confidential information and spreading "inaccurate allegations".
A multi-national police investigation is also under way into ETNZ's allegations of a hacker posing as a European TV contractor convincing the yachting syndicate to send a seven-figure sum to a Hungarian bank account.
The Auckland City Financial Crime Unit is investigating the alleged scam with the help of officers based in Europe and Hungarian authorities, after receiving a report in December.
Dalton has said the hacker changed one character in the contractor's email address when contacting them about the new account details.
The payment was referenced among a raft of concerns and allegations - including the handling of public money, the operation of the Cup itself and public safety - in a June 22 letter, obtained by the Herald, from Auckland Council and MBIE to ETNZ and ACE.
ETNZ has said it was swindled out of a large figure but has hit back at concerns over its handling of public money. Dalton has said the team lost a seven-figure amount, but said that it was the victim of an international scam.
No public money was lost in the scam, he has claimed.
"Some time ago I approved an invoice for a large contractor in Europe," Dalton said.
"And, no, I did not check the noughts and the ones on the bank account. It was the correct invoice as per the contract, and the money was sent to Hungary."
The Government and Auckland Council have poured $250m into hosting the next America's Cup.
The council is planning on spending a further $20m to support the regatta and other events next year. It's share of the $250m is $113m.
The Government is spending $136.5m, including a host fee of $40m.
