Legal specialist says evidence gathered by GCSB not likely to be allowed in court.

Any illegal bugging of Kim Dotcom and his associates by the GCSB spy agency should not affect the ongoing court battle over whether he should be extradited to the US, Auckland University law expert Bill Hodge says.

Prime Minister John Key yesterday announced an inquiry into the unlawful interception of communications by the GCSB while helping police locate "certain individuals" subject to arrest warrants issued in the Megaupload case.

Last week Chief High Court Judge Helen Winkelmann upheld an earlier District Court ruling ordering the FBI to produce some of the evidence it held against Dotcom as it seeks to extradite him.

Dr Hodge last night said any evidence gathered through what was essentially illegal surveillance by the GCSB was not likely to be permitted by the court.


"Except as I understand it, this wasn't about evidence, it was about locating people and the evidence should come from the US because it is an American crime against American law, not what these people have done in New Zealand."

Dr Hodge said it would be of serious concern if evidence such as acknowledgments of offending by Dotcom and associates gathered during GCSB surveillance was used in court.

"But I'd be terribly surprised if that was what this was about. This was a crime allegedly committed in the US, allegedly committed against US law with the evidence gathered by US authorities and sent to New Zealand for a simple extradition ... "

Dr Hodge said it remained unclear whether the GCSB was "being nice to the Americans" or whether they were acting on the request of the Police.

"If it was simply a police request to try and locate some people who were resident in New Zealand then they should have gone through appropriate channels. If it was the Americans who put through a request directly to the GCSB, then I think I'd be very concerned. I don't wish to leap to that conclusion."

Dotcom's lawyer Greg Towers said it was unclear what impact the revelation would have on the ongoing hearing into the legality of the police raid, which continues this week.

"Until we get the outcome of the inquiry we really don't know to what extent there has been illegality. We know it's been illegal because they've admitted it. We will see what the outcome is and it will be interesting to see how this plays out with the High Court proceedings."

Asked if it was a further embarrassment for NZ's law enforcement agencies, he would not comment.

The law
GCSB Act 2003, section 14: Interceptions not to target domestic communications

Neither the Director, nor an employee of the Bureau, nor a person acting on behalf of the Bureau may authorise or take any action for the purpose of intercepting the communications of a person (not being a foreign organisation or a foreign person) who is a New Zealand citizen or a permanent resident.