An international jury has begun 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 champions Oracle Team USA for illegally modifying two of three prototype boats they sailed in four warm-up regattas last year and earlier this year.
The jury held a hearing on Monday for Oracle Team USA employees being investigated under rule 69 of the Racing Rules of Sailing, which deals with gross misconduct. That hearing was expected to continue yesterday.
The syndicate itself faces another hearing tomorrow 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 on September 7 in 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.
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 US$100 million.
Oracle Team USA are owned by software billionaire Larry Ellison, the CEO of Oracle Corporation who has a net worth estimated at US$43 billion. Ellison is not believed to be under investigation.
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. The AC45s sailed in the America's Cup World Series and were prototypes for the high performance, 72-foot catamarans being sailed in this summer's America's Cup regatta.
Russell Coutts, chief executive of Team Oracle USA, has said that management and the skippers were not involved.
Last week, the measurement committee said 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 their 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.