The wife of a former gang leader caught driving while her licence was suspended had her towing and impound fees paid by Work and Income.
Marcia Harris was stopped by Christchurch police about six weeks ago and her car - a 2007 silver Chrysler saloon - was impounded for 28 days.
The Herald on Sunday has learned WINZ paid to get the car towed about 20km from the Rolleston area, where Harris was stopped - and a daily storage fee.
The agency has ordered an inquiry and the Minister of Social Development and Employment, Paula Bennett, has been briefed.
Harris is the wife of Darryl Harris, a former Road Knight and a founding member of Christchurch's notorious Harris Gang.
Harris, who was rumoured to have won a share in a large Lotto prize in the 90s, did not return calls to the Herald on Sunday.
WINZ deputy chief executive Patricia Reade ordered a full review of the case, which involved an emergency grant, on Thursday. She refused to comment on the specifics of the case citing privacy reasons.
"I can say that paying for cars to be returned to people who are not legally entitled to drive is totally unacceptable," she said. "In exceptional circumstances WINZ will provide repayable loans to clients for car towage and impoundment fees. This would only be considered if the car was essential due to illness, disability or employment, and if the client had exhausted all other options. In all cases the loan would have to be repaid."
Minister of Social Development and Employment Paula Bennett was "fully aware" of the situation.
"She welcomes the department inquiry into this and she looks forward to the outcome. She will follow it with interest," said spokesman Brad Tattersfield.
It is not the first time WINZ has financially assisted Harris.
Last year Harris' Christchurch home was gutted in an arson attack and WINZ paid for the family to stay at the Towers on The Park hotel.
A family unit at the hotel costs about $240 per night. The family stayed at the hotel for 10 nights.
Reade refused to answer questions about the accommodation payment.
But at the time a WINZ spokesperson told media anyone who had suffered an emergency, such as a house fire, and who did not have savings or other assets could be eligible for hardship assistance.
Lance Taylor from the East Coast Combined Beneficiaries Union said every person had a right to test their eligibility for assistance from WINZ.
However he was "slightly disappointed" Harris' bill had been paid.
"WINZ should have checked whether she was still able to drive. If someone has not got a licence to drive a vehicle, why would they get assistance to get it back?"