In this June 19, 2017, file photo, J Class boats race as part of America's Cup sailing event, in waters off of Bermuda. Government agencies probing possible misuse of public funds in the staging of next year’s America’s Cup sailing regatta have also expressed concerns about Cup organizers’ ability to host a “safe and successful” event. A June 22, 2020, letter to Team New Zealand and America’s Cup Events from the heads of a government ministry and the Auckland City Council, obtained by New Zealand media, raises questions about the use of taxpayer funds allocated to assist in the staging of the 36th Cup defense in 2021. (AP Photo/Gregory Bull, File)

AUCKLAND, New Zealand (AP) — The New Zealand government has cut funding to Team New Zealand while it investigates whether public money has been misused in its staging of next year’s America’s Cup.

The Ministry of Business, Innovation and Employment said in a statement Thursday it would make no further payments to the America’s Cup defender until its investigation has been completed.

The business ministry said it had paid 29 million New Zealand dollars ($19 million) of a NZ$40 million ($26 million) “events fee” to America’s Cup Events, the Team New Zealand arm charged with organizing the Cup regatta. Further payments will be withheld.

The New Zealand government and the local government in Auckland, where the event will be staged from January to March 2021, will invest NZ$250 million ($162 million) in the Cup defense, not counting infrastructure spending.

The government agency told Team New Zealand and America’s Cup Events in a letter dated June 22 and obtained by New Zealand media that an audit it had commission had raised “serious matters” in relation to the of taxpayer funds. They included a “reclassified” NZ$3 million ($1.9 million) loan from America’s Cup Events to Team New Zealand and the transfer by America’s Cup Events of NZ$1 million ($650,000) to a Hungarian bank account.

The government agency and the Auckland council also expressed concern about America’s Cup Events’ ability to stage a safe and successful event.

In its statement Thursday, Iain Crossar, chief executive of the business ministry, said “while (we) work through this process regarding the claims made relating to the organization of the 36th America’s Cup, we are not intending to make further payments to America’s Cup Events Limited.

“This will be revisited pending the outcome of the process. This process is ongoing and there are contractual agreements in place.”

Team New Zealand general manager Grant Dalton has rejected any suggestion of financial mismanagement, saying he will knock down the claims “one by one.”

Dalton said the payment to the Hungarian account was the result of an online fraud which New Zealand police are investigating. He said Team New Zealand had been the victim of “scammers.”

The America’s Cup regatta is due to begin in January with racing among challengers from the United States, Britain and Italy. The America’s Cup match, in which Team New Zealand will face the top challenger, will begin on March 6.

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