The independent police watchdog has cleared the decision of police to not prosecute former Act MP John Banks over his 2010 mayoral donations return.

The findings of the Independent Police Conduct Authority have been released and say the original investigation was "thorough and robust and was not subject to political interference".

The police received complaints in April 2012 alleging Mr Banks had failed to properly declare details of donations from Kim Dotcom and SkyCity as required and therefore committed a criminal offence.

Police conducted an investigation into the matter and eventually decided not to prosecute Mr Banks. Detectives said they found insufficient evidence that Banks knowingly submitted a false electoral return during his 2010 Auckland mayoralty bid.

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They found evidence to support a lesser charge of filing a false return but the window of opportunity to pursue that charge had already expired.

However, a private prosecution was then launched by serial litigant Graham McCready against Mr Banks which went to trial, where the Crown took over the case, and he was found guilty of filing a false electoral return in respect of the Dotcom donations.

Mr Banks was convicted and sentenced to two months' community detention and 100 hours' community service, as well as prompting his resignation from Parliament ahead of the election.

The success of the prosecution prompted five complaints to the IPCA to investigate the original decision of the police to not lay charges.

Independent Police Conduct Authority Chair, Judge Sir David Carruthers, said today's report looks at the adequacy of the Police investigation and decision not to prosecute based on the information known to Police in July 2012.

"The report has found that the investigation conducted by the Police was comprehensive and thorough. In the Authority's view, all documentation that was relevant to the inquiry was obtained, and all relevant witnesses who could be identified were interviewed," Sir David said.

"The Authority is satisfied, from its inquiry and interviews, that there was no interference or pressure on the investigation team from the Police Executive or politically.

"The Authority has found that the approach Police took in focussing on Mr Banks' knowledge of the specific information in the electoral return at the time it was signed i.e. on 9 December 2010 was reasonable.

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"Police concluded that they could not prove beyond reasonable doubt that at the time Mr Banks signed the return he did so knowing that the particular donations were falsely recorded as anonymous. It was reasonable for Police to reach their own judgment on evidential sufficiency and therefore not to prosecute Mr Banks," Sir David said.

Since the High Court trial, the Court of Appeal quashed the conviction based on new evidence and then last week reversed its previous decision to order a retrial, because of new material which the Crown failed to disclose to Mr Banks' legal team before the appeal hearing.

"We hold rather that the Crown could not both withhold the memorandum and resist the appeal in the manner that it did. The effect was to mislead the Court," wrote Justice Forrest Miller in the judgment released last week.

"We are satisfied that there has been a serious error of process. It is, we accept, attributable to an error of judgment rather than misconduct."

Attorney-General Chris Finlayson, the Minister responsible for the Crown Law Office, is taking a "close look"

But the evidence which led to the acquittal was discovered by Mr Banks' wife Amanda who was stung by the trial judge's opinion of her credibility when he preferred Mona Dotcom's evidence about a lunch, which was crucial to the case.

Mrs Banks tracked down two witnesses from America who corroborated her version of events and whose evidence the three appellate justices said was "likely to have changed the outcome of the trial", if accepted.

Despite finding the police decision to be "reasonable", Sir David said the police did not take a wider view of the evidence, in particular the statement from Kim Dotcom's lawyer Greg Towers.

A file note made by Mr Towers about a conversation he had with Mr Banks recorded the former politician as saying: "as much as wishes to publicly support Kim that may backfire on Kim if it becomes known about the election support".

The police did not ask Mr Banks about this statement when they interviewed him.

The IPCA said it could be "inferred" from the file note that Mr Banks intended the donation to be anonymous and it was open to the police to find that Mr Banks knew about the donation because "that is the only conceivable electoral support he could be referring to.

"Therefore even without reading the return Mr Banks would have known that the details of the donor could not have been recorded, and as such the return would be false.

"Although police could have analysed the evidence in the manner set out above, we do not think that they can be criticized for failing to do so. The investigation involved consideration of conflicting evidence on a number of points.

"The police needed to weigh up all of the evidence and decide whether it was enough to substantiate a prosecution."

Since the High Court trial, the Court of Appeal quashed the conviction based on new evidence and then last week reversed its previous decision to order a retrial, because of new material which the Crown failed to disclose to Mr Banks' legal team before the appeal hearing.

"We hold rather that the Crown could not both withhold the memorandum and resist the appeal in the manner that it did. The effect was to mislead the court," wrote Justice Forrest Miller in the judgment released last week.

"We are satisfied that there has been a serious error of process. It is, we accept, attributable to an error of judgment rather than misconduct."

Attorney-General Chris Finlayson, the Minister responsible for the Crown Law Office, is taking a "close look".

But the evidence which led to the acquittal was discovered by Mr Banks' wife Amanda who was stung by the trial judge's opinion of her credibility when he preferred Mona Dotcom's evidence about a lunch, which was crucial to the case.

Mrs Banks tracked down two witnesses from America who corroborated her version of events and whose evidence the three appellate justices said was "likely to have changed the outcome of the trial", if accepted.