The ministry's deputy chief executive, Andrew Crisp, said he had verbally warned Mr Gilmore in November last year that the emails had an inappropriate tone and his contract would not be extended as a result.
Mr Crisp said he had briefed MBIE chief executive David Smol, but neither of them had told any Government ministers of the complaint beyond telling Mr Key's chief of staff that Mr Gilmore's contract had ended and was not renewed because of "an issue". No details were given.
Prime Minister John Key said he found out only yesterday that Mr Eagleson was told Gilmore's contract would not be renewed because of an issue, but said it was a staffing issue for the ministry.
Mr Key's frustration with the allegations surrounding the bottom-ranked MP was evident. "I don't really think New Zealanders give a toss about him," he said.
Labour leader David Shearer said it was surprising Mr Key had not asked further questions or spoken to Mr Gilmore about the matter after Mr Smol flagged the issue with his chief of staff.
"You would have wanted him to tell them what the issue was for two reasons. One is to make sure the issue wasn't serious enough that there was a question mark as to whether he should come back into office. Secondly, to say to him 'you need to pull your head in and work like a proper MP should'."
Although National could not have stopped Mr Gilmore returning, he said it should have made it clear he needed to improve and show he deserved to be there. "That's what I would have said to my MP."
Mr Key said if Mr Gilmore were to stand down or leave the party it would not affect the Budget vote next week because National would have the numbers without him.
But National will require Mr Gilmore's vote to pass other legislation for which it does not have the support of the Maori Party.