Labour leader David Shearer says he has accepted MP Shane Jones' assurances that he followed proper processes when he approved the citizenship application of Chinese businessman Yong Ming Yan.
Mr Jones approved the application as associate immigration minister in 2008, despite officials' advice that Yan, also known as Bill Liu, did not meet good character requirements.
Yan is currently facing trial on fraud charges and last week immigration officials told the court that when Yan was told he was unlikely to be given citizenship, he had said he had friends in Parliament.
Yan's citizenship was approved and a citizenship ceremony held for him in Labour's caucus room, organised by former Labour MP Dover Samuels.
Mr Jones has repeatedly refused to comment on the case. However, Mr Shearer said he had taken allegations seriously and had spoken to Mr Jones and other MPs who were aware of the case.
Although he did not have access to departmental records, he had looked at the information Mr Jones provided him from the time and "it appears that the process through which Yong Ming Yan was granted citizenship was considered and proper."
He said Mr Jones had also rejected suggestions of financial incentives from Yan, including that he had offered a trip to China.
He said Jones said he had received no money, gifts, or travel from Yan.
"Shane is not a friend of Mr [Yan]. He believes he has met him on one or two occasions."
He said Mr Jones had told him that although officials had recommended Yan not be given citizenship, Mr Jones felt they had not established a clear case against him.
He said Mr Jones had not attended the citizenship ceremony and when contacted by Mr Samuels to request the ceremony be held, he had told Mr Samuels to talk to the Department of Internal Affairs.
He also rejected claims in Court he had approved citizenship the day after the file was passed on to him. He had received it on 14 July 2008 and it was approved on 6 August 2008. The ceremony was on August 11, 2008.
Yan had links with several MPs, including Mr Samuels who had written in support of his citizenship application.
Others also alleged to have written in support of Yan included former National MP Pansy Wong and former Labour MP Chris Carter.