Key Points:

Nicky Hager's book The Hollow Men shows the "breathtaking cynicism" within the National Party, Prime Minister Helen Clark said today.

"I think there are some very, very dubious things that the Labour Party will be taking a look at," Miss Clark said.

"There are statements that have been made in public which are directly contradicted by written evidence, which would appear to be false statements."

Asked on Newstalk ZB whether Labour was considering legal action, Helen Clark said: "We're taking a close look at it".

Deputy Prime Minister Michael Cullen said Labour would be asking Auditor-General Kevin Brady to look into claims in the book that people hired specifically for National's election campaign were paid out of parliamentary funds.

He said even though validating legislation had been passed to cover campaign expenditure by all parties, there was still "an issue of morality" to be examined.

"He [Don Brash] can scarcely now argue, in any shape or form, that there's any reason why other parties should repay money if he's not prepared to look at just how much National ought to repay," he said on National Radio.

Former Labour Party minister and now professional historian Michael Bassett features in the book as an adviser to Dr Brash, and today he was scathing about its author.

"Nicky Hager, in my view, is incapable of damaging any decent person's reputation," Dr Bassett said on National Radio.

"The man is a fraud."

Dr Bassett said he had the original emails between himself and Dr Brash, which Hager had obtained and use in his book.

"I've got clear evidence he has suppressed some emails which don't help prove his points," Dr Bassett said.

"He sees Brash, business, the National Party, as illegitimate.

"The conclusion I'm beginning to arrive at is I think he is like David Irving, the Holocaust denier, only of course Nicky is from the extreme, anarchist left."

Dr Bassett said he had been checking information about himself in the book.

"Hager appears...to have possibly forged some documents relating to me," he said.

Asked whether he would consider legal action, he replied: "Why would I bother with that little creep?"

Hager was asked to respond to Dr Bassett's comments about fraud and forgery.

"I am 100 per cent confident that the information I have, the documents I have about Dr Basset's relationship and assistance to Don Brash, is completely correct," he said.

"This is very embarrassing for Dr Bassett and rather than argue the issue he is trying to discredit my sources."

Hager said he was a very careful researcher, and when he had not been certain about anything, he had said so in his book.

Most attention has been focused on the chapter about the Exclusive Brethren, and when Dr Brash knew it was planning a million dollar anti-government campaign in last year's election.

Hager says in the book a May 24 email from a brethren member told Dr Brash about it, but Dr Brash has only admitted being advised in August.

Dr Brash yesterday said he never saw the May 24 email, which he assumed was sent to an indirect email address and was forwarded by a staff member to National's campaign manager Steven Joyce.

Today Hager said he was sure Dr Brash had known about the email.

"I mentioned he forwarded it to Steven Joyce. I have the email where Don Brash forwarded it to Steven Joyce," he said.

"There is no question about Don Brash having it. And he discussed it with his staff. There is no wriggle room."

- NZPA