"After consideration of all relevant information and the Solicitor-general’s prosecution guidelines, police has determined that there is insufficient evidence to prosecute," a statement from police said yesterday.
Witnesses were interviewed and the case was referred to the legal division of police.
"Police received a complaint in February 2016 regarding an allegation that private communications had been intercepted by an individual.
"This investigation examined all the available information, including interviews with key witnesses.
"All the relevant parties have been informed of this decision," the police spokesman said.
The statement was the first time police provided any comment on the investigation. Mr Barclay (26) said he was "pleased that we can move on".
"I’m looking forward to continuing to engage with National Party members about what my team and I have been working on over the last three years, and my plans to keep up the momentum for Clutha-Southland into 2017," Mr Barclay said in a statement last night.
A claim about a secret recording was part of the so-called "employment issue" in the Gore electorate office that led to the departure of a long-serving staff member.
Fallout from the allegation has divided Clutha-Southland National Party members, and Mr Barclay is now facing a strong selection challenge in the blue-ribbon seat.
Earlier this week, the Otago Daily Times reported Simon Flood, a former top funds manager, is challenging Mr Barclay for selection for the 2017 general election. Several party members contacted refused to comment on the matter yesterday, including electorate chairwoman Margot Hishon.
Mossburn party branch chairman Jim Guyton spoke in support of the "excellent" first-term MP who is "always well dressed".
"He’s young and ambitious, and he’s got the capability ... of being a minister."
Mr Flood (52), who lives in Queenstown with his wife and two children, aged 2, and 6 months, again declined to comment on the challenge when contacted yesterday. He returned to New Zealand last year after a 25-year career in London, Hong Kong, and Singapore.
