The Auditor General's final report into Labour MP and former Immigration Minister Shane Jones' decision to grant citizenship to Chinese businessman Yang Liu or Bill Liu has found "an unfortunate combination of circumstances, but no evidence of corruption".

In the report released this afternoon - which can be found online here - Auditor General Lyn Provost said her office found "no evidence there was any improper motive, collusion, or political interference in the decision to authorise citizenship for Mr Liu".

However the "combination of unusual circumstances and decisions" associated with the case meant it was "not surprising that questions started to be asked".

"We found reason to criticise most of those involved in different aspects of the decision-making process. In the public sector, decisions not only have to be right, they have to be seen to be right."


Labour Leader David Shearer instigated the Auditor General's report in order to dispel the questions raised around Mr Jones' 2008 decision to grant Mr Liu New Zealand citizenship.

He wasted no time reinstating Mr Jones to Labour's front bench this afternoon.

"I thank the Auditor-General and her team for the very thorough investigation they have carried out. I accept the report in its entirety and support the recommendations made to improve processes in future' he said in a statement.

"I'm pleased to welcome Shane Jones back to our front bench and his return to full duties in the portfolios of regional development, forestry and associate finance. Shane is a talented MP who has a huge contribution to make to the Labour team and to New Zealand."

Mr Jones told reporters this afternoon that while he had been cleared of corruption, the report was nevertheless "a smack in the chops''.

"I have to be honest and note that there are some significant criticisms in this report about the way in which I observed processes.''

"I take on the chin the criticisms that I could have asked for more information, I appeared to alienate the officials and, in the view of the report writer, I appeared a tad too hasty to make the decision.

"Objectionable as some of those things might be too swallow, I made this decision and I have to own the decision I made.''

Mr Jones said it had been "a wretched nine months'' while the investigation was conducted but he was now looking forward to trying to rebuild his reputation.

In her overview of the report, Ms Provost said officials were aware that Mr Yang's application had attracted "high profile support from several members of Parliament''.

But, "we found no evidence that any politicians attempted to interfere or apply any pressure in any unusual or inappropriate way in the decisions that Department officials made about the management of Mr Liu's file''.

While the department made a formal recommendation to Mr Jones that the application be declined, Mr Jones did not follow this advice, but the report found the advice and information given to him was "inadequate''.

The application was a particularly difficult and complex one which involved confidential material from other agencies.

Despite those complexities, Mr Jones was never given a briefing from senior officials on legislative requirements or relevant policies.

Briefings he did received lacked important information.

The report finds Mr Jones' understanding of the advice he did receive was that Mr Yang might have to return to China to resolve outstanding issues concerning his citizenship application, "and that there were risks to his safety if he did''.

The report found that while Mr Jones had concerns about the advice he received, he didn't take steps to clarify that advice.

While he knew that both the Police and Immigration NZ were actively investigating Mr Yang, he didn't consult with them about their investigations.

"In keeping with his usual approach for ministerial decisions, he wanted to make a final decision quickly.''

Mr Jones granted Mr Yang citizenship under a section of the Immigration Act dealing with exceptional circumstances including humanitarian concerns. However the report criticises the fact he did not record the reasons for his decision and told Mr Yang's advisers about the decision before letting Immigration officials know.

"This effectively deprived officials of an opportunity they might otherwise have had to correct the misunderstandings on which Mr Jones' decision was based.''

Mr Jones also came in for criticism for annotating a letter from Mr Yang's friend Dover Samuels who was an MP at the time about Mr Yang's citizenship ceremony.

That annotation was understood by officials to be approval for a urgent and private ceremony.

Mr Jones didn't know the Immigration Act required him to approve a private ceremony or that the application didn't satisfy the criteria for an urgent ceremony.