Questions have been raised over why the country's top military attache was not kept in uniform and tried through the Defence Force's justice system after a hidden camera was found at New Zealand's embassy in Washington DC.
The Herald can also reveal that the Government was informed by the Defence Force (NZDF) of a police investigation at the diplomatic outpost last year.
Commodore Alfred (Fred) Keating was one of the Royal New Zealand Navy's highest-ranking officers and in July was serving as the country's senior defence attache in Washington.
He held full diplomatic status and immunity from prosecution in the United States.
But, on July 27, a hidden camera was found in a unisex bathroom on level three of the embassy. It is alleged Keating planted the small covert camera.
The camera was set to capture and record movement court documents released by the High Court read after Keating's name suppression was revoked this month.
After a New Zealand Police investigation in Washington and a search warrant when Keating returned to New Zealand in November last year, charges were filed in the Auckland District Court on February 28.
Keating appeared in court the next week and again on March 29 when he pleaded not guilty to attempting to make an intimate visual recording, electing trial by jury.
Then, just two days after his plea, Keating resigned from his post, an NZDF spokesperson confirmed.
But questions have been raised by a high-ranking NZDF source as to why outgoing Chief of Defence, Lieutenant General Tim Keating, accepted the resignation. The two men are not related.
The Chief of Defence could have kept Commodore Keating in uniform, pending the outcome of a court martial, the source explained.
"The punishment from court martials are generally more draconian than those in the civil courts, for good reason," the source told the Herald.
The move wouldn't have been without precedent either, as Colonel Selwyn Heaten was tried by court martial, reprimanded and fined $1500 in 2009 for bringing discredit to the army while serving as a military attache at the United Nations in New York.
Given the location, high profile of the offence and seniority of the officer involved, the Chief of Defence would have been notified almost immediately, the Herald's source suggested.
Minister of Defence Ron Mark confirmed - after an Official Information Act (OIA) request by the Herald - he knew about the police investigation into Keating.
"I was made aware, by NZDF, of an investigation by police into an incident in Washington," he said.
A request to release further details, briefings and information relayed to Mark's office by the NZDF was refused while the matter remained before the courts.
A request for information from the NZDF under the OIA about what the Chief of Defence and Chief of Navy knew about what happened in Washington was also refused by Commodore Ross Smith, the Chief of Staff at Defence Headquarters in Wellington.
However, the Herald's source questioned why a prosecution against Keating was not pursued through the military judicial process - a decision that would be transparent for officers of a lower rank and enlisted servicemen and women.
"Keating was a serviceman at the time of the [alleged] offences, he should therefore have been retained in the service and committed to trial by court martial," the source claimed.
"Keating was holding the senior defence appointment in the capital of the country we expect to come to our aid in the event of global hostilities. It potentially risks the bilateral trust, so critical between both allies."
Keating, 58, had enjoyed a more than 40-year career as in the military and rose to be the Assistant Chief of Navy at Defence Headquarters and was the commander of the Royal New Zealand Naval base at Devonport.
Court documents about the allegations claimed there was a "thick layer of dust on the homemade platform" indicating the device had been there for many months.
Police also said it appeared to have been purposely mounted inside a heating duct unit and at a height and direction that recorded people who arrived and used the toilet.
When forensically examined, analysis revealed someone had activated the device on July 27 and 19 images were taken of people using the bathroom during a five-hour period.
The images were only of people wearing clothing.
The court documents also alleged that when police executed a search warrant on Keating no indecent images were found but the prosecution alleged that examination of Keating's personal computer showed he installed software for the camera on July 25.
DNA analysis also allegedly showed Keating's matched that found on the camera's memory card.
Keating will appear in court again in July.
New Zealand's Ambassador to the US is Tim Groser and works with about 60 people at the embassy.