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Hearings Begin in America's Cup Scandal

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    NEWSLETTERS

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    SAN FRANCISCO, CA - AUGUST 25: Emirates Team New Zealand skippered by Dean Barker sails near the San Francisco-Oakland Bay Bridge after they beat Team Luna Rossa Challenge in race eight to win the Louis Vuitton Cup finals on August 25, 2013 in San Francisco, California. Emirates Team New Zealand won the Louis Vuitton Cup 7-1 and will now race against Oracle Team USA in the America's Cup Finals that start on September 7. (Photo by Ezra Shaw/Getty Images)

    An international jury on Monday began hearings into what could be one of the biggest scandals in the 162-year history of the America's Cup.

    The panel, meeting in San Francisco, is investigating defending champion Oracle Team USA for illegally modifying two of three prototype boats it sailed in four warmup regattas last year and earlier this year. The jury held a hearing Monday for Oracle Team USA employees being investigated under Rule 69 of the Racing Rules of Sailing, which deals with gross misconduct.

    That hearing is expected to continue Tuesday. The syndicate itself faces a hearing Thursday dealing with Protocol Article 60, which is aimed at protecting the reputation of the America's Cup.

    The jury could decide to punish individual employees or the syndicate itself. If the jury punishes the team, the sanction could be unprecedented, ranging from forfeiture of races in the best-of-17 America's Cup match against Emirates Team New Zealand beginning Sept. 7 on San Francisco Bay, or disqualification. While it's unlikely the jury would give powerhouse Oracle the heave-ho from the regatta, forfeiting any races against the strong Kiwis would be a huge setback.

    Team New Zealand beat Italy's Luna Rossa 7-1 in the Louis Vuitton Cup finals to advance to face Oracle. Luna Rossa's only victory came when Team New Zealand dropped out because the electronics system that controls the hydraulics failed.

    Oracle Team USA has been conducting two-boat training, but the Kiwis are race-tested and are credited with being the first team to sail their 72-foot cat on hydrofoils, which reduces drag and increases speed.

    The jury could also levy a fine, although it's unknown how big of a financial penalty the jury would need to impose to punish a syndicate with a budget estimated at $100 million.

    Oracle Team USA is owned by software billionaire Larry Ellison, the CEO of Oracle Corp. who has a net worth estimated at $43 billion. Ellison is not believed to be under investigation. According to a jury document, two members of the panel interviewed 16 members of Oracle Team USA and five employees of America's Cup Race Management.

    The illegal modifications to the 45-foot catamarans came to light late last month when the boats were being prepared for the Red Bull Youth America's Cup, which starts Sunday

    The AC45s, sailed in the America's Cup World Series, were prototypes for the high performance, 72-foot catamarans being sailed in this summer's America's Cup regatta. Russell Coutts, the CEO of Team Oracle USA, has said that management and the skippers were not involved. Last week, the measurement committee said that one of the boats previously believed to have been illegally modified was found to be within regulations.

    Coincidentally, the boat that was cleared was Oracle Coutts 5, which was skippered by Coutts in some of the regattas in question.

    The boats that were illegally modified were ones sailed by Jimmy Spithill, Team Oracle USA's skipper, and Ben Ainslie, an Olympic star who's sailing with Oracle this summer in hopes of launching a British challenge for the 35th America's Cup.

    Oracle Team USA forfeited its overall championships in the first two seasons of the America's Cup World Series.

    Coutts has called the illegal modifications a ``ridiculous'' mistake that didn't affect the boats' performance. The scandal has set the tone for what is expected to be one of the great grudge matches in America's Cup history.

    The bosses of Emirates Team New Zealand, managing director Grant Dalton and skipper Dean Barker, both accused Oracle Team USA of cheating, as did Luna Rossa skipper Max Sirena. Coutts, a New Zealander, told The Associated Press last week that Oracle Team USA is motivated because of Dalton's barbs, which also included criticizing Ellison's vision for a grand regatta that failed to materialize.

    "I don't have to give a motivational speech. This team is incredibly motivated to win. This has picked it up 10, 20, 30 notches. They can thank Grant Dalton,'' Coutts said.