Labour's foreign affairs spokesman David Shearer asked the Ministry of Foreign Affairs and Trade (MFAT) in a select committee this morning whether the official was given a "facilitation payment" to leave her job after the scandal became public.
MFAT chief executive Brook Barrington refused to comment, saying he would not discuss privacy or employment matters.
Mr Shearer pressed on, asking whether MFAT paid her compensation in a bid to suppress the matter.
"There was no hint of a payment so that she would not talk?" he asked.
Mr Barrington said that he was not chief executive at the time, and said he did not know about any such payment.
He refused to speak to reporters after the committee hearing.
An inquiry released earlier this month found that a single email sent by deputy chief of protocol, Mary Oliver, was to blame for a high-level misunderstanding between New Zealand and Malaysian officials in mid-2014.
The email gave the Malaysian High Commission the impression that defence attache Muhammad Rizalman bin Ismail, who had been charged with sexual offending, could return to Malaysia with diplomatic immunity.
Her error was then compounded by other procedural failures within the ministry, the inquiry found.
Ms Oliver left her role at MFAT several months later.
Mr Shearer told reporters after the committee meeting that former MFAT head John Allen said it would be "untenable" for Ms Oliver to stay in her job.
"I was interested to know whether there was some arrangement made to squirrel her out of the ministry and what those sorts of arrangements were."
