New Zealand Prime Minister John Key issued an official apology to Kim Dotcom for illegal spying conducted by the Government Communications Security Bureau (GCSB) -- the NZ equivalent to the CIA, which is prohibited from engaging in domestic spying. Nevertheless, GCSB conducted a program of surveillance against Dotcom and his associates as part of the US-led shutdown of Megaupload, Dotcom's file-locker service, which had angered the US entertainment industry.
The GCSB reports to the Prime Minister's office, so it's not clear how this surveillance could have gone on without the oversight of Key or his staff. Paul Neazor, Inspector-General of Intelligence and Security for New Zealand, reported on the illegal spying, explaining that it took place because the GCSB mistakenly believed that Dotcom did not have permanent residency in New Zealand, making him fair game for surveillance (visitors to New Zealand, take note).
However, as a Computerworld NZ article shows, the "Blue Folder" prepared by NZ police's anti-terrorist Special Tactics Group for the intelligence service shows, Dotcom's residency status was clearly set out. Also, Dotcom set off $500,000 worth of fireworks when he was awarded residency.
Neazor found that the Government Communications Security Bureau (GSCB), which by law can only conduct action against foreign targets, failed to check Dotcom’s immigration status. If they had done so they would have discovered he hold’s a permanent resident’s visa.
“The GCSB relied on information provided to it by the Organized and Financial Crime Agency. In my view, reliance on another party by GCSB is unacceptable,” Key said.
“It is the GCSB’s responsibility to act within the law, and it is hugely disappointing that in this case its actions fell outside the law. I am personally very disappointed that the agency failed to fully understand the workings of its own legislation.”
Here's a video of the PM explaining himself.