A New Zealand businessman, arrested on suspicion of spying on South Korea for North Korea, is in custody in Seoul.
The 56-year-old, identified only as Kim, is accused of collecting intelligence on high-tech military hardware for the secretive communist state.
It is believed he had acquired New Zealand citizenship and was involved in trading with North Korea.
He faces a death sentence if South Korean authorities find him guilty of espionage.
A spokeswoman for Foreign Affairs Minister Murray McCully said: "We can now confirm a New Zealander has been arrested in South Korea.
"The New Zealand Embassy in Seoul is working with local authorities and will offer consular assistance if required.''
Kim was arrested in a sting early last month with a 74-year-old man called Lee.
Police told Chosun Ibo newspaper they had footage of their meeting with the agent and alleged they had a statement from Kim saying he received an order from the North.
The Korea Herald reported that the suspects had allegedly been following the instructions of a North Korean agent based in the Chinese city of Dandong near the North Korean border since July last year.
Under his direction, they obtained military secrets via email from the former head of a domestic defence contractor, who was booked without detention.
A Seoul Metropolitan Police Agency statement said the older man was sentenced to life imprisonment on espionage charges in 1972.
He was released on parole in 1990, but police said he retained strong ties with Pyongyang.
Espionage carries a maximum penalty of death in South Korea, but there have been no executions, for any crime, since 1997.
South Korean prosecutors say the pair had collected information on military equipment, including long-range rocket detectors, as well as devices capable of disturbing global positioning system (GPS) signals.
Seoul had accused their northern neighbours of trying to jam GPS systems on hundreds of civilian aircraft and ships between April 28 and May 13.
Officials claimed they had identified the jamming source as coming from Kaesong, a city close to the Demilitarized Zone that divides North and South Korea, which Pyongyang denied.
Labour's Foreign Affairs spokesman Phil Goff said South Korea was a country which "observes the rule of law'' and he hoped the naturalised New Zealander would receive a fair trial.
He said: "In these situations you have to allow the rules under the law to apply and to ensure anyone who is a New Zealand citizen is able to get representation and support to answer any charges.
"It would be a serious charge but everyone is innocent until proven guilty.''
