Peter Dunne followed his resignation as a minister today by insisting he "did not leak" a secret Government intelligence report.
Prime Minister John Key accepted the resignation of Dunne as Minister of Revenue as he released a report by former top public servant David Henry into who leaked a Government Communications Security Bureau (GCSB) report earlier this year.
Key said the report showed that the United Future Party leader had not met all the requests for information from the inquiry.
Dunne said at a press conference this afternoon that he was "extremely concerned and upset by the Henry Report's findings regarding the unauthorised release of the Kitteridge Report in so far as they relate to me".
"While I did not leak the report, and challenge Fairfax to confirm that, some of my actions after I received an advance copy of the report were extremely unwise and lacked the judgement reasonably expected of a Minister in such circumstances."
He did not say what those actions were, but said he had concluded that he could not continue to function effectively as a minister, "given the lapses of judgement I have shown".
Asked what the lapses in judgement were, Dunne replied that he had canvassed the possibility of leaking the report to a journalist, Dominion Post reporter Andrea Vance, but maintained he had not gone through with it.
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Dunne said he could not rationally explain his actions, and said he had not wanted to harm the Government.
"I have acted extraordinarily unwisely, even stupidly, and I am now resigned to paying the price for that."
A copy of the report into the GCSB conducted by Cabinet official Rebecca Kitteridge, which was prompted by the Kim Dotcom case, was leaked to Fairfax in April while the Prime Minister was in China, a week before it was due to be released officially.
The critical report showed that at least 88 people may have been illegally spied on between April 2003 and September last year.
Fairfax Media executive editor Paul Thompson said this afternoon that Fairfax "has no comment to make on the report and we never comment on our confidential sources".
"This story was an excellent scoop by our reporter and was handled with the utmost professionalism by the Fairfax team."
Dunne did not comply
Key said today that when he announced the terms of reference for Henry's inquiry into who released the report he made it very clear that he expected all MPs and their staff to fully cooperate.
"In this situation, a sensitive government document was leaked to a reporter and that is a very serious matter.
"The report shows that Mr Dunne has not met all of the requests for information from the inquiry.
"I am extremely disappointed with what has taken place. I expect my Ministers to always uphold the highest standards, and to be held to account for their actions."
He said he had met with Dunne to discuss the findings of Henry's report.
Key said he had told Dunne that he had to comply with the inquiry or he would have to resign.
"He has advised me that he remains unable to fully meet the inquiry's requests, and accordingly, he offered, and I have accepted his resignation as a Minister."
Key said he was unable to explain to him why he had refused to hand-over his email correspondence.
When asked if he believed Dunne, Key replied: "He's told me categorically that he didn't leak the report. I want to believe him but the problem is unfortunately the inquiry doesn't rule him out and I can't dismiss the possibility that he has because of the information contained in the report."
The Prime Minister said the report contained details of the engagement Dunne had with a reporter.
He said it "details some of the discussions that they had, which of themselves would be inappropriate, between a minister, Mr Dunne, [and a reporter] in so much that they discussed GCSB and that was a sensitive matter that I don't think he should've been discussing anyway."
Why Dunne won't release the emails
Dunne said there was nothing inappropriate about the emails he had not handed over Key, and said they would show he had not leaked the report.
However, he said he had not released the emails because "once we start saying private correspondence is public property we go down a very slippery slope".
The United Future leader maintained he was not trying to protect the reporter.
He said as a result the only honourable thing to do was to offer his resignation.
"I do so with a very heavy heart and a great deal of reluctance, but acknowledge there is no credible alternative.
"The last few days have been especially difficult for my wife and family, whose support throughout I acknowledge with huge gratitude; for my staff, whose careers will be affected, for my friends, and colleagues in the United Future Party."
Dunne said he was sure one of his staff had not leaked the report.
He said he would now focus on rebuilding his party.
"For my family's sake, I request that our privacy be respected at this difficult time."
Dunne said he received the review on the GCSB on March 27.
Fairfax published an article on April 9 about the secret report, and Henry said in his report that it was likely the reporter gained access to the report sometime between March 22 and April 8.
He said he had identified three people, one being Dunne and two other public servants, who had access to the report and had correspondence with Vance.
Henry said he obtained all the information he required from the two public servants - a GCSB officer and an officer in Key's office - and had ruled that they had been working on official duties.
Henry's report shows Vance and Dunne exchanged 86 between March 27 and April 9. The report said Dunne declined to let Henry read those emails, instead offering edited versions of 44 emails he exchanged with the reporter.
Henry said GCSB issues and the Kitteridge report were prominent in those exchanges.
The report said Dunne was to meet on April 8 - the day before Vance's article about the leaked report. Dunne told Henry they did not meet on this day.
Henry said in absence of the full 86 emails he cannot take the matter further.
Key said he was "deeply saddened by these events".
"Mr Dunne has had a long distinguished career in Parliament and has made a significant contribution as a Minister over many years."
"He has been a great partner for the National Party in Government. But fundamentally, the public have high expectations of Ministers and so do I," Key says.
Dunne, an MP for 29 years, will also vacate his positions as Associate Minister of Conservation and Associate Minister of Health.
Key said Deputy Prime Minister Bill English will be acting Revenue Minister, until a decision is made about a permanent portfolio allocation.
Key said Dunne's associate ministerial responsibilities will revert to the relevant ministers.
"Mr Dunne has advised me the he intends to continue to meet the terms of the United Future's confidence and supply agreement with the National Party."
ONE News political Editor Corin Dann says Dunne is going to attempt to stay on as an MP at this point so the Government will keep its 61 seat majority, so it does not have to rely on the Maori Party. But he said the opposition parties want answers and will not let up.
"So this could become very problematic for the Government if Peter Dunne was to in fact leave Parliament," he said.
"Peter Dunne said he did not want to hurt the Government but that is exactly what he might end up doing."
Dunne offered support
The United Future Party Board said it "fully supports the party's Leader, Peter Dunne, at this difficult time".
"We recognise his outstanding leadership and service to the party over the years and will stand by him as leader.
"The party has in the past week had a substantial boost in membership, which clearly demonstrates public support for and belief in the need for a Liberal Democratic party. A lot of this support is coming from within Mr Dunne's Ohariu electorate."
The party said it will be making no further comment at this stage.
New Zealand First Party leader Winston Peters has written to police asking for them to investigate Dunne's involvement.
His resignation announcement came after a mass walk-out in Parliament yesterday over the Speaker's decision to allow Dunne to continue as party leader despite United Future being de-registered after it was unable to confirm to the Electoral Commission that it has 500 paid up members.