An Auckland company accused of exporting the means to make military equipment to Israel has been cleared of any wrongdoing.

The Government last year rejected a bid by the company, Oscmar International, to export laser harnesses used in military training to Israel's Ministry of Defence.

The refusal came during the diplomatic row over the arrest of suspected Mossad spies in New Zealand.

Customs officials investigated whether the company exported the intellectual property to make the harnesses, as claimed in leaked documents, and if so, whether it had broken the law.

The investigation found that the allegation was "unsubstantiated", and the company had "gone to great lengths to remain within New Zealand law", a Customs spokeswoman told the Herald last night.

The reprieve came as about 35 protesters picketed Oscmar's offices yesterday.

The group, Auckland University Students for Justice in Palestine, stood firm in the company's carpark from 4pm and voiced their anger with chants such as "Made in Auckland, used in Gaza" and "For peace and justice, quit your jobs". Protester Omar Hamed said: "We still believe they are developing and exporting military training systems," though he admitted he had no evidence to support the claim.

"We're here to put pressure on the workers not to work for a company making money from murder."

The protest lasted 90 minutes and finished without any confrontation.

The Government has approved several Oscmar applications to export the laser equipment, but has not released further details, saying the information is commercially sensitive.