New Zealand First leader Winston Peters says illegal spying on Kim Dotcom has made New Zealand "look like a joke", and it will be costly for taxpayers.
Prime Minister John Key has ordered an inquiry into breaches made by the Government Communications Security Bureau (GCSB) while it assisted police to investigate Megaupload founder Dotcom over piracy charges.
It has been revealed that the Crown's foreign intelligence agency unlawfully intercepted information in the lead up to the police raid at Dotcom's mansion.
Peters has little doubt Dotcom will expect compensation for the blunder, saying that the German national "is going be lining up the New Zealand taxpayer for a lot of money".
The Megaupload founder's lawyers have not ruled out suing the Government, saying they will wait to see what the results of an inquiry currently under investigation by the Inspector-General are.
Former Prime Minister and Law Commissioner Sir Geoffrey Palmer
told TVNZ's Q and A programme that it was clearly a serious
breach of privacy at the very least.
"It seems to be that there will be quite large legal proceedings that follow from all of this. Mr Dotcom is the stuff out of which leading cases are made," Palmer said.
Peters told Q and A that Dotcom should never have been allowed into the country, and that he has been incorrectly made to look like "a hero or Robin Hood".
"He bought his way in just because he was someone with money. It's revolting, and it's made us look like a joke."
The story has been picked up overseas, with international media
saying that the country looks like a hillbilly with the way the
case has been handled.
Former Labour Party President Howard League CEO, Mike Williams told Q and A he thinks the Dotcom case has damaged New Zealand's international brand.
'I told the truth', says officer
Meanwhile, Police have closed ranks behind the senior officer at the centre of the Kim Dotcom case who is facing allegations he lied under oath about illegal spying on the alleged internet pirate.
A leading legal expert says the official stance means the officer, Detective Inspector Grant Wormald, will now likely avoid a police investigation into whether he provided incorrect information during a High Court hearing.
The allegations against Wormald, who led the Dotcom investigation for the Organised and Financial Crime Agency (OFCANZ) arose last week during a hearing centred on the spying revelations.
Wormald was accused by Dotcom's lawyer Paul Davison of giving "inconsistent" evidence in court about work undertaken by the Government Communications Security Bureau (GCSB) on behalf of police, in which Wormald said no other agency had been involved in the surveillance.
However, court documents show the GCSB had been engaged by police to monitor Dotcom - illegally - for at least a month before his arrest in January.
GCSB staff had also attended a meeting with police including Wormald, US authorities and Crown Law before the raids.
Davison said the inconsistencies in the police's account are "grave" and "significant".
But Police Commissioner Peter Marshall has backed Wormald, and says speculation around his actions and those of other police while the case is still before the court is "deeply concerning".
The Star-Times understands the police view is that Wormald's evidence was wrongly interpreted, not untrue.
University of Law Professor Bill Hodge said if Wormald had top police backing, it was unlikely he would be investigated for perjury.
"That's the difficulty with police in that they're both the prosecutor and the employer so it's very complicated," Hodge said.
"Police might have wanted to pause before giving him complete backing, to take a closer look."
Hodge said Wormald had two defences - either that it was an honest mistake or he was just doing what he was told by his employer.
When spoken to by the Sunday Star-Times, Wormald said the answer had been taken out of context, and rejected suggestions he had been lying. "I'm saying I told the truth."
However, a police source said Wormald has argued the answer to his question has been taken out of context. He said he was asked about "physical surveillance" and was not referring to the snooping of emails and phonecalls which GCSB is understood to have carried out.
Wormald refused to go into the matter further because it was in front of the courts, but said a transcript of the hearing would provide context to what he said.
Marshall backed that stance, saying it was "deeply concerning" there had been "considerable recent speculative, inaccurate and selective commentary" around the actions of police officers involved in the Dotcom investigation.
"While it is not appropriate for me to comment on the detail of matters that are still before the court, I consider that police investigators have acted with integrity and in good faith throughout this inquiry, and they continue to have my unequivocal support," Marshall said.
Fairfax Media has so far been refused access to the August 9 court transcript, but viewed footage of the hearing taken by Campbell Live. It shows Wormald on the stand, explaining and defending, under cross-examination, the police investigation and the raids, which included the use of the elite police squad known as the Special Tactics Group.
The pair also discussed the way in which the FBI had collected evidence about Dotcom - intercepting his emails - and the regularity with which that occurred.
Asked if police obtained their own interception warrant allowing them to listen to Dotcom's conversations, Wormald replied: "We certainly did not." When Davison moved on to questions about the December 14 meeting between police, Crown Law and US authorities, Wormald said he would "rather not" name the other group in the room - now known to have been the GCSB.
Davison finally says: "So apart from the surveillance which [the police surveillance team] might have been going to undertake on your behalf was there any other surveillance being undertaken here in New Zealand to your knowledge?" Wormald replies: "No there wasn't."
Mansion raid complaint possible
Kim Dotcom will complain to the police watchdog IPCA about the raid on his mansion.
Dotcom's lawyer Paul Davison, QC, has raised concerns about inconsistencies in the testimony of the raid supervisor Grant Wormald.
He indicated in court last week that the legal team may pursue a complaint.
A member of Dotcom's legal team confirmed a complaint about the raid - that saw dozens of officers and a helicopter swoop on the Coatesville estate.
The complaint will also include the actions of Detective Inspector Wormald. Wormald told the court last month that no other agencies were surveilling the tech mogul.
It emerged last week that Government spy agency GCSB was illegally intercepting communications from Dotcom and his Dutch co-accused Bram van der Kolk. Both were New Zealand residents and protected from snooping by the bureau, which is allowed to monitor only foreign intelligence.