Up to 27 people who entered New Zealand falsely claiming to be refugees will be allowed to stay, meaning 27 genuine refugees may have missed out on coming into the country.
RNZ National has reported that the Department of Internal Affairs has refused to explain its decision not to revoke the citizenship of the 27 people.
Meeting minutes showed Immigration New Zealand's refugee and protection unit and its appeal tribunal displeased with the decision, saying it undermined the protection of the refugee system from fraud, RNZ reported.
Labour's immigration spokeswoman Sue Moroney said 27 genuine families could have had refugee status if the frauds had not occurred.
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"New Zealanders need confidence in the integrity of the system.
"The Government needs to disclose what's occurred here so that people can have confidence in it."