The Minister who signed off on Peter Thiel's New Zealand citizenship, despite the controversial billionaire having only spent 12 days in the country, today defended his decision.

Nathan Guy, the Minister of Internal Affairs in 2011 who used an "exceptional circumstances" clause to make Thiel a citizen, told reporters the surprise Kiwi was only news because of his recent backing of US President Donald Trump.

"This story got legs because of his connection to the Trump regime," Guy told media at parliament this afternoon.

"In 2011 I was unaware of that. I was presented with a file that was incredibly comprehensive. This individual was backed by Rod Drury, Sam Morgan, he's made significant investments," he said

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"And, ultimately, officials came to me with a recommendation that he should be granted citizenship, and I agreed with that."

Guy said citizen Thiel was a "great ambassador and salesperson for New Zealand," but was unable to explain why the citizenship was kept secret and only came to light six years after it was granted, nor why the controversial billionaire had sought it in the first place.

"I don't know indeed why he's kept it secret .... I can't answer that, that's something you'd need to get from Peter Thiel," Guy said.

Thiel has not commented publicly on his New Zealand citizenship since the story broke in January, and his representatives today again declined to respond to questions asked by the Herald.

The revelation - showing surprise citizen Thiel met less than one percent of the typical residency requirement of 1350 days - led Labour MP Iain Lees-Galloway to criticise the government's use of an "exceptional circumstances" clause to grant citizenship.

"It's astonishing that someone who has only been in the country for such a short period of time should be offered citizenship. This goes beyond exceptional, almost to the point of unbelievable," he said.

The precise brevity of Thiel's history in New Zealand was released by the Department of Internal Affairs today after a complaint by RNZ to the Ombudsman over what were claimed to be inappropriate redactions to his citizenship file.

The Ombudsman agreed with RNZ, saying the public interest in the case outweighed any privacy concerns.

Then-Internal Affairs Minister Nathan Guy invoked an exceptional circumstances clause in 2011, enabling normal requirements for a prospective citizen to have lived - and intend to live - in New Zealand to be waived.

Guy initially said he was unable to recall the case - despite Thiel being the only adult in at least five years to be granted citizenship despite not intending to reside in New Zealand - but later reviewed the file and said he made his decision based on the billionaires' local investments and philanthropic activity.

The disclosure of Thiel's citizenship - broken by the Herald as part of inquiries over his $13.5m purchase of a large farming block bordering Lake Wanaka - caused a domestic and international furore.

The opposition Labour Party asked questions in Parliament about whether the matter meant New Zealand citizenship was for sale, with political criticisms intensifying after it was revealed Thiel's local investments had also been given a generous government subsidy.

A Herald investigation into Thiel's local activity discovered his chief local investment vehicle, Valar Ventures, had exercised a little-known buyout clause in its partnership with the New Zealand Venture Investment Fund to reap massive profits at the taxpayers' expense.

The arrangement meant Thiel contributed $7m to the deal, but after its large stake in Xero skyrocketed in value was able to claim all profits from the venture. The move is understood to have led to profits of at least $23m for Thiel, while the NZVIF and taxpayers were left barely breaking even.

Reports obtained under the Official Information Act showed the Government was warned as far back as 2014 about the potential for the Valar Ventures partnership to blow up in their faces.

A consultant told the Ministry of Business, Innovation and Employment that the arrangement "creates some difficult optics where, in the Valar Ventures example, the taxpayer is offering an American billionaire a loan at less-than-market rates".

The news of Thiel's surprise Kiwi citizenship, and developments over the following months, landed the story on the front page of the Financial Times, as well as extensive coverage in the New York Times and the Guardian.

Thiel has become an enormously influential and controversial figure in the United States over the past decade.

He founded online transaction service Paypal, and used the proceeds to make more than US$1 billion from a 2004, US$500,000 investment in a little-known internet startup called Facebook. Thiel retains a seat on the board of the social media giant.

His largest current business investment is in Palantir, a secretive big data analysis firm he co-founded in 2003. The company, backed early by the CIA, works primarily with intelligence agencies to sift through and find patterns in large datasets.

The New Zealand Defence Force, the Security Intelligence Service and the Government Communications and Security Bureau were revealed by the Herald in April to have long-standing links with Palantir.

The Herald has complained to the Ombudsman over government spy agencies' refusal to confirm they contract to use Palantir software, and exactly how lucrative and long-running the contracts have been.

The Ombudsman has provisionally indicated the NZDF would reveal more information about its ties to Palantir, but the SIS and GCSB were maintaining their position that releasing such information would prejudice national security.

Thiel has in more recent years branched out into politics, promoting libertarian causes and being one of the first high-profile backers of then-Republican primary candidate Donald Trump.

His support for life-extension technologies, including the possibility of transfusing blood from young people, has also raised eyebrows. (His New Zealand property holding vehicle, Second Star Ltd, appears to be derived from directions given in Peter Pan stories about how to find Neverland, a realm where children never have to grow old.)

Thiel also gained notoriety in United States media circles after bankrolling a lawsuit by former professional wrestler Hulk Hogan against website Gawker. Gawker had in 2007 outed Thiel, and the billionaire and the gossip site had an acrimonious relationship.