Prime Minister John Key has apologised to Megaupload founder Kim Dotcom after the Government's foreign intelligence agency illegally spied on the internet tycoon.
Key's apology comes after the publication of a report into the actions of the Government Communications Security Bureau (GCSB), ahead of a raid on Dotcom's Coatesville mansion in January.
The report from the Inspector-General of Intelligence and Security, Paul Neazor, found the GCSB, which acts against foreign targets, had not checked Dotcom's immigration status thoroughly and should not have been intercepting his communications as he held a permanent resident's visa.
"I apologise to Mr Dotcom, I apologise to New Zealanders because every New Zealander that sits within the category of having permanent residency or is a New Zealand citizen is entitled to be protected from the law when it comes to the GCSB, and we failed to provide that appropriate protection for him," Key said this afternoon.
"My own view is the agency has let itself down very badly, it essentially failed at the most basic of hurdles, there are a number of times when it could have resolved the issue, and in fact New Zealanders were entitled to believe the agency would have performed a lot better."
Dotcom was arrested, along with three others, in January after police raided his rented mansion at the request of the FBI.
Before the raid, police had asked for information about Dotcom and his associates in case they posed a threat to officers. The GCSB gathered the intelligence even though it had no jurisdiction to do so.
The GCSB had been wrongly told by the police that Dotcom was a foreign national and fell within their responsibilities.
"Mr Dotcom applied under the old legislation. He was granted a visa under the old legislation and had he come into New Zealand at that time he would have not have been protected and therefore the agency would have been able to spy on him," Key told TV ONE's Close Up.
"But in the interim period he came in, the legislation changed and at the point the NZ Government, through the GSCB, got it completely wrong."
The Prime Minister called it the fault of "human error" but also asked for an assurance from the agency that there are no other cases of people's communications being intercepted unlawfully since the Immigration Act changed in 2009.
The Director of the Government Communications Security Bureau, Ian Fletcher, has apologised for the error.
"We got this wrong," he said.
"Both factual errors and unacceptable errors of legal interpretation were compounded, most especially by our treating those interpretations as fact for too long. It should not have happened."
Fletcher said the case has highlighted flaws in the GCSB and these will be corrected.
Opposition attacks Government
The Greens say it is simply not believable that the intelligence agency did not have a grasp on immigration law
"The GCSB knows about this law, they work under this law all the time, it is impossible to believe the GCSB did not know they were not allowed to spy on New Zealand residents," co-leader Russel Norman said.
Norman also took issue over Neazor's upcoming role as supervisor
to changes at the GCSB.
"In his own reports he says he has responsibility to assist the Minister to make sure the GCSB is acting lawfully, so he is one of the problems in this whole case... because he failed to do his job."
New Zealand First and Labour also want a more in depth inquiry.
"We need to restore that confidence and restore that
reputation," Labour leader David Shearer said.
Kim Dotcom agreed, hitting Twitter to say: "Numerous unlawful acts against us by the NZ Gov have been exposed. It's time for a full, transparent & independent inquiry."
Snooping on Dotcom
In the lead up to the raid on Dotcom's mansion Neazor's report notes that the police were concerned that some of the internet millionaire's associates could pose a threat to officers.
Because of these potential dangers the police decided it was important to understand what the people might do in the event of a raid.
The GCSB collected information about the comings and goings at Dotcom's house and passed it on to the police. Neazor said this information was gathered illegally.
The Immigration Act was changed in 2009 and it seems this may have led to the confusion over Dotcom's status.
Neazor said the GCSB had incorrectly assumed Dotcom had another step to take in the immigration process before his communications were protected.
However, under his particular residence class visa his communications were safe and the GCSB should not have been involved in monitoring him.
As a result of the report Fletcher said the Bureau would be halting similar operations and implementing a number of changes.
These include establishing a new approval process for supporting police and other law enforcement agencies, and working out a new system for confirming immigration status.
The proposals will be submitted to the Inspector-General before they are initiated.