The independent police watchdog has confirmed it will investigate the decision by police not to prosecute former Act MP John Banks over his 2010 mayoral donations return.

Police originally said it would not prosecute Mr Banks over donations from Kim Dotcom and Sky City in his donations return from the 2010 mayoral campaign, saying there was insufficient evidence that he had knowingly submitted a false return.

That prompted Graham McCready, a retired accountant, to take Banks to court instead and the Crown took over the prosecution after Banks was sent to trial.

The High Court in Auckland found Banks guilty of knowingly filing a false return earlier this month, prompting his resignation from Parliament. He is due to be sentenced on August 1.


A spokesman for IPCA said it had received a number of requests to investigate but had told complainants it was keeping a "watching brief" and would review the matter after the court trial.

"We've done that and decided to undertake an investigation, but until we've gathered some material we are unable to say what form the investigation will take or how long it will take."

One of those complainants was Wellington-based Roger Brooking, who was told of the IPCA's decision today by email.

Mr McCready has also now filed charging documents against Prime Minister John Key and the police officer who led the investigation into Banks, Detective Inspector Mark Benefield, claiming the Police had conspired to defeat the course of justice by not prosecuting.

In response, Assistant Commissioner Malcolm Burgess said in a statement that all police staff involved in the John Banks investigation acted professionally and impartially in carrying out the inquiry.

"We have the utmost faith in the integrity of the investigation and the staff involved will be fully supported in any proposed court process."

Labour has called for an independent inquiry into police investigations in politically charged cases and whether there was political pressure in cases such as Banks' and the 'teapot tapes' complaint taken by Prime Minister John Key in 2011.