Pressure is mounting on Prime Minister John Key to authorise a formal inquiry into former ACC Minister Nick Smith's involvement in his friend Bronwyn Pullar's case amid speculation about the past nature of their friendship.

During a snap debate in Parliament, NZ First leader Winston Peters called for Dr Smith to resign or be removed from Cabinet, describing the furore as "a shabby little case involving blackmail, sex, a minister with a conflict of interest".

And Opposition leader David Shearer last night called for Dr Smith to resign or be sacked for trying to influence ACC's treatment of Ms Pullar.

The Greens called for Auditor General Lyn Provost to investigate the matter, and said Dr Smith should be stood down until that is completed.


Ms Pullar is the former National Party activist who was accidentally sent information about 6700 other ACC claimants, including data which identified some as making "sensitive claims" for injuries resulting from rape or other forms of sexual assault.

It has emerged that following an approach she made to an ACC board member, she had a December meeting with two senior managers at which, ACC alleges, she threatened to go public about the breach of privacy unless she received a guaranteed two year benefit. Her support person at that meeting was former National Party president Michelle Boag.

Ms Pullar has denied ACC's allegations and the matter is now being investigated by the police.

Following Mr Peters' statement in Parliament, Dr Smith refused to comment on speculation about his past relationship with Ms Pullar. "I'm just not commenting on my private life," he said.

He initially indicated to the Herald that the letter he wrote in July last year in which he vouched for Ms Pullar's capabilities before a 2002 bicycle accident which left her with head injuries was on plain paper suggesting it was written in a personal capacity.

But yesterday he said he'd obtained a copy of the letter and it was written on ministerial letterhead.

Dr Smith said he did not seek to influence any ACC staff member in relation to the case but accepted that anyone reading the letter would be mindful of his role as ACC Minister and may have been influenced by it for that reason.

Mr Key has accepted Dr Smith's apology for his behaviour and continues to back him.


Meanwhile, Mr Shearer, who initially said he wanted to know the full facts about Dr Smith's letter before passing judgment, late yesterday said he had now reviewed what was known about the incident.

"I believe the only appropriate course of action is for him to resign. If he does not do so, John Key should remove him."