The Department of Internal Affairs allowed billionaire Peter Thiel to redact key information from his citizenship file, a decision later criticised by the Ombudsman who said the saga attracted "public disquiet".

Ombudsman Leo Donnelly's full ruling into the affair was only recently released, and followed a successful complaint by RNZ's Benedict Collins about the redaction of the number of days Thiel had spent in the country before being awarded citizenship in a private ceremony in Santa Monica on August 2011.

That information, released in June following a provisional ruling by Donnelly, showed Thiel was made a citizen after only spending 12 days in New Zealand. Citizenship typically requires applicants to have spent 1350 days in New Zealand during the preceding five years.

Thiel avoided usual requirements when then-Minister Nathan Guy invoked a little-used "exceptional circumstances" clause of the Citizenship Act, citing Thiel's philanthropy and venture-capital investments in this country.

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An Official Information Act request by the Herald into the handling of the botched redaction revealed emails showing lawyers acting for Thiel were behind the blacking-out of the short time he lived in the country.

The Ombudsman's full ruling showed Internal Affairs were happy to accommodate Thiel's concerns, despite describing the case for protecting his privacy in this case was "borderline".

The level of redactions received in documents by the Herald - including the entirety of correspondence from Thiel's lawyers at Bell Gully - has resulted in another complaint to the Ombudsman.

Labour Party immigration spokesman, MP Iain Lees-Galloway, said the redactions at Thiel's behest - later found by the Ombudsman to be outweighed by public interest - were concerning.

"We have a government prepared to put the interest of a wealthy individual ahead of the public interest. It also continues to demonstrate that Mr Thiel has not made good on his promise to loudly and proudly tell the world about his NZ citizenship - he tried to cover up every detail," he said.

A spokesman for Internal Affairs said: "As part of the assessment process we consulted with Mr Thiel through his representatives, considered his views, and sought to balance personal privacy with public interest considerations. "

Current Minister for Internal Affairs, Peter Dunne, said while he agreed with the Ombudsman's decision in the Thiel case, he was "satisfied generally" with the way his department handled requests for official information.

The Ombudsman's full ruling concluded there was a "very strong public interest in the public knowing that the Minister's broad discretion ... was exercised in a fair and reasonable way, on a proper basis, and without inappropriate factors or considerations being taken into account.

"In Mr Thiel's case, there has been and continued to be some public disquiet that the Minister granted him citizenship in circumstances where his connection to New Zealand was not publicly known, and even in hindsight, was not obvious".

Ombudsman Donnelly said of the importance of the case: "Citizenship is not, and should not, be conferred lightly."

Appeals to Thiel's privacy were largely dismissed by the Ombudsman, who also consulted Privacy Commissioner John Edwards who said in the report: "Mr Thiel should have been aware that obtaining citizenship in such circumstances would attract public attention."

Internal Affairs documents noted this ruling may serve as a precedent for all citizenship awards made under the exceptional circumstances clause.

The release also shows while the Department of Internal Affairs sought to release the redacted 145-page citizenship application in the days following news of it becoming public, but multiple deadlines for Thiel's lawyers to respond to this proposal were missed.

"Our client is currently in the US and we are dealing with time differences," a lawyer for Bell Gully told Internal Affairs on January 27.

The case has attracted considerable attention, with Official Information Act requests for the citizenship file received from every national news organisation in New Zealand, while international news organisations including the New York Times, Forbes, NBC, Buzzfeed and CNN also made contact with Internal Affairs seeking more information.

Representatives of Thiel again failed to respond to questions from the Herald, about either about the redaction or why he had sought citizenship in the first place.