RCU Forums - Need your opinions on problematic break-in on new GO 28

Need your opinions guys on a problematic break-in I did on my cousins new GO.28 3 port engine. Long story short (fairly), I ran the engine for the first time on a fast idle (New HPI 25% power fuel used) with the hsn and lsn at factory settings (rich) for maybe 5-6 secs on a starter box and then the engined stopped. Tried to start several times after with no joy. Upon closer inspection the engine had partially seized and lost most of it's compression. After removing the back plate and head it became apparent that the con rod has struck the crank case and a shard of metal has been cycled round the engine and knackered the sleeve and piston. Sent engine to suppliers for inspection and they are adamant that the engine has ingested water, wd40 or some other substance which is all over the internals(see pics below) which has caused it to hydro-lock and consequently damaged the engine. I call BS and think the droplets are fuel and the black globules are semi combusted oil. IMO the rod has struck the casing due to stress caused by excessive pinch/tightness when cold.

Your opinions please