Dotcom illegal spies - how their secrets were revealed

Kim Dotcom. Photo / Mark Mitchell

Questions raised over two previous cases of bugging by Government agents.

The unlawful bugging of Kim Dotcom and his acquaintance by the Government's foreign intelligence agency was revealed only after Dotcom's lawyers found out about it from police in the High Court.

And although Prime Minister John Key said he was "quite shocked" about the unlawful bugging - and that he'd been told it was a genuine mistake - official concerns have been raised about the surveillance agency's actions in previous cases.

During a High Court hearing last month, Dotcom's lawyer Paul Davison asked about anonymous Government representatives who were at a meeting before the police raid on Kim Dotcom's Coatesville mansion.

They were never identified in open court as Government Communications Security Bureau agents.

But yesterday Mr Key said he had asked Paul Neazor, the Inspector-General of Intelligence and Security, to make an inquiry after he was told the GCSB had unlawfully intercepted communications before the raid.

He had been told the unlawful bugging was a mistake and indicated the spy agency had not realised Dotcom and one of his co-accuseds were New Zealand residents.

The GCSB is barred from intercepting communications of New Zealand residents and citizens - that is the job of the Security Intelligence Service which would require a warrant signed by the Prime Minister.

Dotcom's lawyers say it is too early to say whether the development will help in his fight against extradition to the United States, where he is wanted on cyber-piracy charges.

But it is a further embarrassing development for New Zealand authorities in the Dotcom case, in which a High Court judge has already found that search warrants used by police were invalid.

Council for Civil Liberties spokesman Thomas Beagle said the fact it had come to light because Dotcom's lawyers had flushed out the information was a concern, and showed stronger oversight was needed.

Mr Key said he did not know of the unlawful interception until Mr Neazor told him last Monday.

He had immediately expressed his displeasure and ordered an inquiry.

Mr Key said he believed it was an isolated event because in the four years he had been Prime Minister, the GCSB had acted "thoroughly professionally and always in the law".

However, it has raised questions about whether he was giving the agency too loose a rein.

The GCSB has been questioned before about exceeding its powers to intercept communications.

The Inspector General's most recent annual report reveals Mr Neazor had previously questioned the agency about two instances in which he was concerned it had exceeded its brief.

Mr Key said he did not believe the agency had tarnished New Zealand's reputation and rejected suggestions he was neglecting his oversight of it.

Intelligence analyst Paul Buchanan wrote on Kiwiblog that he expected Mr Neazor to place the blame with police, who had led the raid.

"The investigation will find the police liable for supplying false information on which the GCSB acted," he said.

"Once that is established, heads will roll. Whether it is another Neazor whitewash or not, this investigation is directed at the cop leadership, not the GCSB."

What is the GCSB?

It is the Government agency responsible for gathering foreign intelligence for New Zealand to use and share with its allies.

The GCSB gathers most of its information through a radio interception station at Tangimoana, in Manawatu, and the spy base at Waihopai, in Marlborough.

Analyst Nicky Hager said its main work was "large-scale spying" on telecommunications picked up through the Waihopai satellite.

It could also target individuals and although it kept its methods a secret, the most likely scenario in the Dotcom case was that the agents used access to NZ's telecommunications systems to monitor the movements of Dotcom and his acquaintances.