America's Cup: Hacker posed as European TV contractor then scammed Team NZ

A multinational police investigation is under way into how a hacker posing as a European TV contractor convinced Emirates Team New Zealand to send a large financial payment to a Hungarian bank account.

New Zealand Police confirmed yesterdaythat the Auckland City Financial Crime Unit was investigating the scam with the help of officers based in Europe and Hungarian authorities, after receiving a report in December.

The payment was referenced among a raft of concerns and allegations set out in a June 22 letter, obtained by the Herald, from Auckland Council and the Ministry of Business, Innovation and Employment (MBIE) to ETNZ and America's Cup Events Ltd.

Team NZ admits it was swindled out of a large figure but has hit back at concerns over its handling of public money.

Team NZ boss Grant Dalton told media yesterday a hacker had gained access to material belonging to a European-based television contractor who the syndicate had been working with, including details of contracts and payments due dates.

Team NZ received an email which they thought had come from the contractor, advising of a new Hungarian bank account into which they should make a scheduled payment.

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A seven-figure sum was subsequently transferred into the account. The alarm was raised weeks later when the contractor asked about the missing money.

Dalton said the hacker had changed one character in the contractor's email address when contacting them about the new account details.

New Zealand police were now working with police in Europe to investigate the scam. Some of the money had been recovered.

Dalton strongly rejected any suggestion that Team NZ was involved in fraudulent activity, instead saying it had been conned.

"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."

Dalton said it was immediately reported to MBIE. He stressed it was not Government money which went missing.

MBIE is looking into claims of misspending by Team NZ and ACE.

The June 22 MBIE-council letter revealed concerns and allegations around the handling of public money, the operation of the Cup itself, worries about public safety, and showed officials were concerned about whether Team NZ and America's Cup Events (ACE) were in breach of their obligations.

The letter raised the possibility of withholding the next tranche of taxpayer funding because of their concerns.

The Government is spending $136.5m - including a $40m host fee - into hosting the 36th America's Cup.

Economic Development Minister Phil Twyford said the pot had not been frozen while MBIE's review took place.

Twyford conceded there could be "theoretically" tens of millions of taxpayer dollars being spent while an active review was conducted into whether public money had been misused.

In all, the Government and council have spent $250m on hosting the Cup. The council is planning to spend a further $20m to support the regatta and other events next year, and another $100m to spruce up the waterfront in time for the Cup and other events in 2021.

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

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

Among MBIE's and the council's concerns were that a public investment made to ACE for the event was spent on costs unrelated to the event's management or delivery. That included a $3m loan to Team NZ that had been "reclassified" and a payment to a Hungarian bank account "through fraud".

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Team NZ said they did not consider the $3 million a loan, but payment for work that it 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 $6 million 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."

ACE director Greg Horton also said the money was not a loan. He added that a freeze on taxpayer funds for the Cup would not derail it.

"Any withholding of funds by MBIE will not in any way affect the event."

On concerns over record-keeping and providing information, Team NZ and ACE said a wealth of information had been provided to Beattie Varley, a firm of forensic accountants examining the Cup's funding.

"Much of the information now being requested involves confidential contracts and material which should be reviewed on site at our base."

Team NZ's letter, released yesterday, addressed concerns from MBIE and the council about some of their personnel not co-operating with Beattie Varley.

"A wealth of information has been provided to Beattie Varley, at times under difficult circumstances due to the Covid-19 lockdown," it says.

Auckland Mayor Phil Goff said it was important the allegations were thoroughly and professionally investigated.

"The allegations relate to funds solely from Government, and MBIE is currently undertaking the investigation into them. While the investigations is ongoing, and ahead of its findings, it is not appropriate to comment further."