Report from BusinessDesk
The government intelligence agency that has admitted unlawfully spying was operating without a warrant when it undertook the operations relating to the Kim Dotcom case, virtually confirming the target was a foreign national rather than a New Zealander.

At his post-Cabinet press conference this afternoon, Prime Minister John Key would reveal very few details beyond his statement earlier today that he had ordered an inquiry into the unlawful interceptions by the Government Communications Security Bureau.

However, he confirmed the GCSB, a parallel organisation to the Security Intelligence Service, only requires a warrant for interceptions when it involves a New Zealand resident.

Kim Dotcom, the German-born internet entrepreneur at the centre of an extradition bid by US law enforcement authorities, was declined New Zealand citizenship. Three other foreign nationals are also among those targeted in the US-led operation which saw Dotcom’s north Auckland mansion raided on Jan. 20.

Key said he was made aware of the unlawful spying on Sept. 17 and immediately ordered an inquiry into what he believed was an “error or mistake.”

“I was quite shocked,” he said.

The Crown Law Office and police have already weathered criticism they were too eager to help the US Federal Bureau of Investigations in its attempt to pin internet piracy charges on Dotcom, founder of the Megaupload internet file sharing site.

Key indicated the GCSB interceptions related to more than one person, referring to “the individuals involved”, but would not comment on whether communications intercepted were emails, phone calls or both.

The GCSB is a signals intelligence service, combing telecommunications traffic for evidence of issues that could affect national security.

Key repeatedly asserted he had not known of the Dotcom investigation before the raid in January, or of the GCSB’s involvement in surveillance relating to the Dotcom case before Sept. 17, when he was informed by its director, Ian Fletcher.

Asked whether he took responsibility for the error, Key said “no”.

“The first I heard of it was last Monday. I indicated my displeasure and that a full inquiry would be necessary.”

No GCSB staff had been stood down while the inquiry took place, he said.

Earlier BusinessDesk report by Paul McBeth
Prime Minister John Key has ordered an inquiry into the nation’s secretive intelligence agency, the Government Communications Security Bureau, amid allegations the unit’s staff unlawfully acquired communications relating to the Megaupload case.

The Crown has filed a memorandum in the High Court in the Megaupload case advising the judiciary the GCSB “acted unlawfully while assisting the police to locate certain individuals subject to arrest warrants,” by acquiring some communications without statutory authority, Key said in a statement. Inspector-General of Intelligence and Security Paul Neazor will investigate the matter and has been asked to recommend measures to prevent a repeat occurrence.

“I expect our intelligence agencies to operate always within the law,” Key said. “Their operations depend on public trust.”

The memorandum comes just days after a Court of Appeal hearing in the Megaupload case where the US Federal government sought to quash a court order for it to provide evidence in support of its claim to extradite the file-sharing website’s founder Kim Dotcom, and three of his lieutenants.

The US authorities allege Dotcom and his co-accused engaged in criminal copyright infringement and money laundering of some US$500 million.

Last week, Dotcom vented his frustration at the US government’s stalling tactics, telling reporters his accusers were “just dragging things out.”

“If it was up to them, we would have no money for our legal defence, no evidence to defend ourselves, we would not even have our own computers back to show our own evidence,” he said.