Questions are being asked as to why a taxpayer-owned company is doing contract work for the government of Myanmar.
National says government owned engineering company Kordia has been working on cell tower installations in Myanmar.
In September pro-democracy protests - led by monks - where crushed in a military crackdown. Official media say 10 people were killed in the biggest anti-junta protests in two decades, although Western governments say the real toll is likely to be far higher.
The situation in Myanmar dominated discussions at November's ASEAN summit, which Prime Minister Helen Clark attended.
Discussing Kordia's involvement in Myanmar on TVNZ's Breakfast programme, Clark said the State Owned Enterptrise didn't try to hide the contract, referring to it in a publication in November last year.
"The job was worth $80,000. It was something to do with putting up cell towers for cellphones. Now quite frankly I think that is probably aiding democracy in Myanmar, not a step back from it because one of the ways of getting news out to the world ... is precisely through that technology," says Clark.
National's Murray McCully says the idea of cell phones assisting democracy in Myanmar is ridiculous.
"There's nothing that the regime in Burma has done - and New Zealanders have seen the evidence on television screens - that has been fone to foster democracy. It's a brutal repressive regime which has done enormous damage to the people," says McCully.
He says allowing Kordia to work in Myanmar is totally inconsistent with ministerial tantrums over Air New Zealand carrying Australian troops to Kuwait and sanctions in place against Fiji.
The Green Party agrees it is not the way to conduct a moral foreign policy.
"If New Zealand truly supports democracy in Burma, we should heed the call of imprisoned pro-democracy leader, Aung San Suu Kyi, not to do business with the regime," says Green MP Keith Locke. "The least the government should do today is give a moral lead, first off by preventing any state-owned company helping the junta through its operations in Burma.
Lobby group Burma Campaign New Zealand says the towers will aid the military and the government, but not the oppressed population.
