Mr McCully apologised to Prime Minister John Key this morning after discovering that the Malaysians had pulled out their diplomat, Muhhammed Rizalman Bin Ismail, in the belief that the New Zealand Government would not object.
Until last night, both Mr Key and Mr McCully had believed the Ministry of Foreign Affairs had asked Malaysia to waive diplomatic immunity in order for the accused to face charges in New Zealand.
Mr Key effectively publicly criticized the Malaysians for not revoking diplomatic immunity when news of the case broke in the Herald On Sunday.
After inspecting the file himself last night, Mr McCully said it became clear that New Zealand's messages to Malaysia had been ambiguous.
And officials advising Malaysia's Foreign Minister, Anifah Mana, were entitled to believe from informal communications from MFAT that the course of action Malaysia took would be acceptable to New Zealand.
Mr MCully made his apology in front of the media today.
"I have made it clear that we apologise for a performance that was below the standard that should be expected of the New Zealand Foreign Ministry.
The accused, a warrant officer with the Malaysian defence force, is the subject of a military board of inquiry and may face a court martial.
Mr MCully said "he hasn't got away with it. There is a process underway and we should have some respect for the process".
Watch: Malaysia will extradite suspect
Extradition has not been ruled out but Mr MCully said that was a matter for the police, not politicians.
Mr McCully told Parliament in a snap debate that in a conversation he had with Mr Anifah, that he had expressed the view the diplomat concerned had tarnished the reputation of all Malaysian diplomats anywhere in the world and he wanted to see the matter treated seriously.
Superintendent Sam Hoyle, Wellington District Police Commander said the police were continuing to support the victim.
"There are currently two charges before the court, for burglary and assault with intent to rape, and there are warrants to arrest in relation to both those charges.
"Police are continuing to work with Crown Law and MFAT to consider all the options which would achieve the best outcome for the victim and for justice.
"This includes pursuing extradition and Police are working with Crown Law and MFAT to establish the legal foundation for this.
"Given the complexities of this case, this process will take some time to work through and we will keep the victim updated regularly as things are progressed.
"As the charges are still currently before the court, and there is potential that the circumstances of the offending could be played out under a range of jurisdictions, it is not appropriate for any comment to be made publicly about the circumstances of the offences."
Labour's David Shearer said it was incredible that Mr McCully had given no guarantee he would seek to have the diplomat brought back to New Zealand to face trial.
"This is simple step and the right one to obtain justice for the woman concerned.
"How will a Malaysian court complete its job when the evidence in here in New Zealand?"
He was also critical of Mr McCully for not insisting on being kept up to date on the case, having been originally informed the day after the incident that a diplomat had been arrested and a waiver of diplomatic immunity would be sought.
Mr McCully found out only last Friday that the man had returned home and diplomatic immunity had not been revoked.
"Either he is not telling the whole story," said Mr Shearer, "or that is an extraordinary indictment of the functioning of his office and ministry."
"Surely a charge of attempted rape involving a diplomat is something a minister would take an active interest in."
Meanwhile MFAT chief executive John Allen said this afternoon that he knew nothing about the issue until Friday either - seven weeks after the diplomat was charged.
He apologised to Mr McCully and Mr Key "for the situation in which they have found themselves".
He also apologised to the victim "for the turmoil that she has had to suffer as a consequence of this issue playing out as it has".
Mr Allen said sensitive information tended to be "compartmentalised" within sections of MFAT and was therefore not passed on to him or the minister.
These processes would now be reviewed.
"What is clear is that our Malaysian colleagues believed not agreeing to the waiver was a process the New Zealand Government agreed with," Mr Allen said.
"That was clearly not the case. The ministry dropped the ball."
Read more: Malaysian diplomat could still be extradited
Read the NZ Government's letter to Malaysia here:
Read the response from Malaysia here:
