Prime Minister John Key has tried to distance himself from claims Mark Hotchin was paying bloggers to undermine the Serious Fraud Office, saying he does not know about the arrangement and it is not a matter for the National Party.
Former Justice Minister Judith Collins resigned as minister yesterday after Mr Key's office was given an email from Whaleoil blogger Cam Slater in which he talked about sharing information on former SFO director Adam Feeley with Ms Collins.
At the time, the SFO was investigating Mr Hotchin's company Hanover.
Mr Key is expected to announce further details on an inquiry into Ms Collins' involvement after Cabinet meets tomorrow. She has denied the claims made by Mr Slater in the email.
Mr Key said it was nothing to do with the Government beyond Ms Collin's possible involvement which would be subject to an inquiry. She was the minister in charge of the SFO at the time.
Mr Key said Labour leader David Cunliffe's statements that it amounted to potential corruption were "trying to create a political smear for his own benefit".
He said Ms Collins had disputed the version of her role set out by Mr Slater in the email. Journalists mentioned in the same email had also rejected what he said about them.
Mr Key was getting advice today on what shape the inquiry should take. He did not believe police were the appropriate body to investigate because it was a matter of the relationship between a minister and a chief executive.
He said an initial investigation by the State Services Commissioner Iain Rennie had found nothing amiss in Ms Collins' relationship with Mr Feeley.
He did not believe Ms Collins had been colluding with Mr Slater and Cathy Odgers.
"There's no evidence to support that. What there is is a characterisation which she has utterly refuted and her refuting of that has been supported at this point by the State Services Commission." However, he said it was a serious issue so he wanted it looked at properly.
Mr Slater has complained to the Privacy Commissioner about Mr Key's decision to release the email, which Mr Key said he was shown on Friday night. Mr Key said Mr Slater was free to do so.
"I'm quite comfortable that that information should have been in the public domain, because again it's about accountability. I think if I said 'this minister has resigned but I'm not going to tell you why' we would have spent lots of days talking about that."
It is understood Cathy Odgers sent it to a Beehive staffer to alert them in case it was included in a release of material by the person who hacked Mr Slater's messages.
Labour has called for the police to seize all information on the computers in Ms Collins' office to ensure it is not destroyed to hide evidence.
Mr Key said Ms Collins was a "thoroughly professional person" and he had no doubt she would comply with the inquiry. Asked if he could guarantee no documents were being shredded or computer content deleted he said "that would be an amazing claim to make."
"If I thought that was happening I'd be dealing with it directly myself."
Asked what he would do if further information came to light, he said he would not deal with hypotheticals, innuendo or rumour.
Subpoena for PM's office
Mr Key also confirmed today his office has received a subpoena from the Inspector General of Security and Intelligence for a closed hearing nine days before the election.
Mr Key said he was not surprised as he had expected Inspector General Cheryl Gwynn to do a thorough inquiry.
The inquiry is looking at the handling of an Official Information Act request to the SIS from Mr Slater, including whether Mr Slater was tipped off in advance about the contents and timing of a release by Mr Key's office.
"I'd be absolutely disappointed, shocked and horrified if a proper inquiry wasn't being undertaken. I'll be more than happy to go along and give my version of events. I've thoroughly checked and I know my position is absolutely right."
Blogger Cam Slater has confirmed he has been given a subpoena to appear on September 11, just nine days before the election. Mr Key said the timing suited him.
"I think it's good timing. It's really important the facts are on the table. My position is absolutely rock solid. That's the nature of having a proper inquiry. If it wasn't being done this way frankly I'd be pretty disappointed because we want to make sure the facts are out there and not some claims from the Opposition that this has been a white wash."
Mr Key said he did not know who else had been summoned or whether National Party staffer Jason Ede had been.
He said National had boosted the powers of the Inspector General to ensure it could mount thorough inquiries.
Mr Key has maintained he was not personally told of the OIA by former SIS director Warren Tucker, but his office was. Mr Key was on holiday in Maui at the time.
In a statement this afternoon a spokeswoman for Mr Key said his office received a letter on Friday from Ms Gwyn advising them of her "intention to interview a number of staff in connection with her inquiry into the release of information by the NZSIS to Cameron Slater".
"There was no indication in the letter that the Prime Minister would be called personally and the Prime Minister's office is not aware that would be the case. In terms of Prime Minister's office staff, no date was given in the letter for the interviews to take place."
Read more of the Herald's coverage:
• Calls for a full commission of inquiry
• The money men and how they toppled Collins
• Commissioner concerned by allegations
• Gallery: Collins in cartoons
• I'm the victim of a smear campaign: Judith Collins resigns
• Resignation reaction: 'Too little, too late'
• The email that brought down Judith Collins
• Collins resigns: Blogger backs mate
• Collins resigns: Jared Savage and Fran O'Sullivan respond
Nicky Hager's book alleges Slater was instructed by figures in Mr Key's office about what to ask for, what he would be sent in response and that the material would be released to him quickly.
Mr Slater confirmed both that he had been instructed to appear at the hearing, and that he was taking legal advice over what information including emails, Facebook messages and other communications he may be required to provide to Ms Gwyn's inquiry.
The Herald understands the hearing will be held in Wellington, but will not be open to the public.
'Something rotten in the heart of the Government'
Campaigning at Avondale markets this morning, Labour leader David Cunliffe said he took no joy in the developments yesterday which saw Judith Collins resign from her ministerial posts.
"The allegation that a major company would be involved with the Whale Oil website and the Minister of Justice to attack a regulator is absolutely beyond the pale," he said.
"This is not the type of government New Zealanders deserve and it will change under a Labour Government that I lead."
Allegations that bloggers may have been paid to launch attacks against the Serious Fraud Office and the Financial Markets Authority were not yet proven, which was why a full inquiry was needed, Mr Cunliffe said.
"But if true they would show corruption which goes to the heart of the government.
"If proven this would be a very, very serious matter.
"The minister would be completely, completely out of line with her duties to the Crown to preserve the regulatory process, let alone by interfering - if true - to undermine her own chief executive on behalf of a commercial interest, this doesn't get much worse."
Mr Cunliffe described the latest allegations in the Dirty Politics saga as "as bad as politics gets".
"It's got to be cleaned up. New Zealanders deserve better."
The saga wasn't limited to Judith Collins, he said.
"This is John Key's network, this is not just about Judith Collins.
"This is a much bigger, deeper issue, something is rotten in the heart of the National Government.
"New Zealanders deserve a better government than this, they have three weeks to exert the power of the ballot box to clean up this mess.
"The Prime Minster must now come out and say what he thinks of the dirty tricks machine that was running out of his own office. That is something that he must do for New Zealanders, this is not just about Judith Collins."
'I'm going to deal with that very firmly'
Earlier today, Mr Key stopped for a few questions this morning while campaigning at St Lukes, saying he believed New Zealanders would recognise he had done the right thing by accepting Collins' resignation and calling an inquiry.
"Where there's an issue that's been brought to my attention, as there was on Friday, I think New Zealanders can see I'm going to deal with that very firmly."
He hoped it would put the Dirty Politics book and its fallout behind him. He continued to try to downplay the credibility of the book.
"The book, maybe it should be called Desperate Distractions really."
He did not believe it had damaged his reputation as a leader because he had dealt with it fairly and quickly.
"In the case of Judith Collins I accept there needs to be a full inquiry there because some of the allegations, or at least the statement Mr Slater made in his email is a serious one."
However, he said that others were implicated in the email, including Herald journalists.
"That media outlet has strongly said those statements made are wrong. And I think that will demonstrate again to New Zealanders that just because something is written in an email by one person, in this case, the blogger [Mr Slater], that's characterisation of what that person thinks and doesn't necessarily reflect the truth, because it's been utterly refuted by the media outlet."