PM says sorry to Dotcom

Prime Minister John Key has apologised to Megaupload millionaire Kim Dotcom for what he has described as "basic errors'' by the GCSB.

In a media conference after the release of a report into unlawful monitoring of Dotcom and one of his co-accused colleagues, Mr Key said he was "appalled'' at the agency, saying it had "failed at the most basic of hurdles''.

"Of course I apologise to Mr Dotcom, and I apologise to New Zealanders.''

He said New Zealanders were entitled to be protected by the law "and we failed to provide that protection to them''.

Mr Key said he was ultimately accountable for GCSB and had made his displeasure clear to the Director of the GCSB.

He said he did not believe any of the information collected had been passed onto the FBI, although information about the location of Dotcom and his colleagues was sent to police.

He doubted it would be admissible in a court.

The report,from Inspector General of Security and Intelligence Paul Neazor, found the GCSB understood incorrectly that Mr Dotcom and his associate Bram van der Kolk had not fully gained permanent residence in New Zealand and were therefore not protected against surveillance.

The Government Communications and Security Bureau (GCSB) is forbidden to spy on New Zealand citizens or permanent residents.

However, in his report Justice Neazor noted that when asked by the police to monitor internet tycoon Mr Dotcom and three associates, the GCSB sought an assurance from the police that the men's immigration status meant it could spy on them legally.
Police gave that assurance.

But in his report, Justice Neazor noted: "As this matter went along what was discovered in the case of Dotcom and associated people was that resident status had been obtained on their behalf under the Immigration Act 1987 and carried forward under the later 2009 Act.

"It was understood incorrectly by the GCSB that a further step in the immigration process would have to be taken before Dotcom and associates had protection against interception of communications.''

Mr Key said the report showed there were two cases of human error at the heart of this matter.

"First, the GCSB originally relied on the police's information about the residency status of the people in question. They did not check further.

"Second, this error was compounded after the operation was concluded by a simply wrong interpretation of the law.

"The Inspector-General noted there was potential for confusion between the relevant agencies about changes to the Immigration Act in 2009 and the subsequent effect on the GCSB legislation.

"At the time in question, Kim Dotcom was not a New Zealand citizen. He was, however, classed as the holder of a residence class visa, but it was not interpreted by the Police or GCSB at the time that he fell into the protected category of permanent resident.

Mr Key said the GCSB has relied on information provided to it by the Organised and Financial Crime Agency New Zealand, which he described as "unacceptable''.

"GCSB had a responsibility to fully understand what the change to the Immigration legislation in 2009 meant for its own operations, including whether individual visa holders were protected or not.

"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.''

The GCSB has apologised to the Prime Minister for the way it handled its part in the case.

In a statement, the current director of the GCSB, Ian Fletcher, said he had apologised to the Prime Minister and deputy Prime Minister, Bill English.

"We got this wrong. Both factual errors and unacceptable errors of legal interpretation were compounded, most especially by our treating those interpretations as as fact for too long, It should not have happened.''

Mr Fletcher said the GCSB would move immediately to make changes to prevent a repeat, saying he knew it would take time to regain trust and confidence.

It would:
• halt its work to support police and other law enforcement agencies until new approval processes were in place
• change the way confirmation of immigration status was determined before any law enforcement activity was done
• ensure the Inspector General approved the changes before they were put in place.

Mr Fletcher said over the next few weeks it would also overhaul its compliance framework and tighten its processes, as well as conduct an internal audit.

"I know that it will take time to regain the trust and confidence that we have lost. But I also know that we will be able to do so and be able to re-establish the high standard of accountability expected of us.''

Mr Key ordered an inquiry by Inspector General of Intelligence and Security Paul Neazor after being told on September 17 by the Government Communication and Security Bureau that it had been unlawfully monitoring Mr Dotcom's communications.

Court documents released this week show the bureau, which is forbidden to spy on New Zealand citizens and residents, was unaware that Mr Dotcom and another of his associates who was monitored, Bram van der Kolk had permanent residency in New Zealand.

That was in spite of the fact Mr Dotcom's residency status was widely reported in the media.

Yesterday, when asked why the GCSB which he is responsible for took so long to realise Mr Dotcom was New Zealand resident, Mr Key said it was "a very complex issue''.

Justice Neazor noted that Dotcom was granted a residence visa in November 2010 under the Immigration Act 1987, Investor Plus category.

"At that point in time he did not meet the definition of 'permanent residence' under the GCSB Act as it then was.''

However, on November 29, 2010 the new Immigration Act 2009 came into effect that deemed Dotcom to hold permanent residence as stipulated under the GCSB Act from that time.

New Zealand First is calling for a Commission of Inquiry into the illegal surveillance carried out by the Government Communications Security Bureau in regards to the Dotcom deportation case.

NZ First leader Winston Peters says the Justice Paul Neazor inquiry, hastily arranged by Prime Minister John Key, was too little, too late for an issue of national and international importance.

"The lack of communication between Government ministers, senior police staff, the GCSB, the SIS, and the Prime Minister's office is evidence of systemic failures.

"We are calling for a formal Commission of Inquiry, with appropriately set terms of reference, so we can get to the truth around what has become a complete fiasco.

"Details around New Zealand's shambolic role in the FBI investigation are going directly to the White House and could well harm our international reputation."

Labour Leader David Shearer said Justice Neazor's report was "a whitewash because it ignores the complete failure of democratic oversight by Prime Minister John Key".

"John Key is in charge of our spy agencies and national security. The buck stops with him. It is astonishing, therefore, that this report fails to deal with how he managed to be so blissfully unaware of what was going on under his own nose when he is the person with sole democratic oversight. It is farcical."

The report also failed to address why in the 15 meetings the Prime Minister had with GCSB this year, "he was not briefed about this issue given it involved national security and a massive police operation involving the FBI".

Green Party co-leader Russel Norman said Justice Neazor was the wrong person to carry out the inquiry.

"Under the Inspector General of Intelligence and Security Act, and in his own reports, what he says is he had a responsibility to assist the minister to make sure the GCSB was acting lawfully - he is one of the problems in this whole case because he failed to do his job to stop the GCSB acting lawfully," Dr Norman said.

"He's the one doing the investigation - if John Key was a proper minister he would have appointed an independent person to run the inquiry, rather than a person who has a clear conflict of interest."

Dr Norman said New Zealanders were relying on Mr Key, as Minister of the GCSB, to hold people accountable.   Speaking from the United States, Dotcom's lawyer Ira Rothken said the apology was "very appropriate under the circumstances".

Mr Rothken had read the report, "and I know enough right now that report raises more questions than it answers".

He said he and his team would "go through the judicial process" before deciding whether it would take legal action in response to the report's findings.

Opposition parties were unanimous in calling for a more detailed independent inquiry into the matter.

Labour Leader David Shearer said Justice Neazor's report was "a whitewash because it ignores the complete failure of democratic oversight by Prime Minister John Key".

"What we are calling for is an independent wide ranging report, an inquiry into what has gone on here."

"The report is only really looking at the lower levels, it's very narrowly focused.

"Secondly, it doesn't deal with the real accountability, which is those right to the very top which is John Key's accountability. He is control as the Act says of this agency which seems to have been acting without proper control."

During a snap debate called in Parliament this afternoon on the matter, Green Party co-Leader Russel Norman also called for an independent inquiry as did NZ First Leader Winston Peters.

Mr Peters said the report didn't answer all of the questions that needed responses.

He said the matter was "a very profound issue" which "shook the confidence of the public".

Mr Key's oversight of the agency had "not just failed but seemingly never existed.

- By Adam Bennett and Claire Trevett of the NZ Herald/Herald Online