N. Zealand govt may overhaul spy service after Dotcom ‘stuff up’

New Zealand’s Prime Minister John Key has said the country’s spy agency could be in for a shake up after illegally spying on Megaupload magnate Kim Dotcom. Key described the affair as a “stuff up,” while his rivals allege a cover up.

Prime Minister Key says he expects a high level report on the actions of the Government Communications Security Bureau (GCSB) will prompt a major overhaul in the organization.

"I haven't seen it yet, but when we do get it I wouldn't be at all surprised if it indicates there needs to be significant change," he said. Key maintains that he was unaware that the GCSB had been illegally spying on Dotcom prior to the raid on the internet tycoon’s New Zealand mansion in January 2012.

The rival Labor party obtained evidence that the GCSB knew as early as February of last year that it had acted illegally by spying on Kim Dotcom.

"A powerpoint presentation given at that meeting (in February) specifically raised the issue of Kim Dotcom's residency. This is crucial because by law the GCSB is not allowed to spy on New Zealand residents," New Zealand’s One News cites Labor’s deputy party leader Grant Robertson as saying.

"An affidavit given to the Court from Det. Inspector Grant Wormald of OFCANZ states that following the meeting concerns were raised about the residency issue," he continued.

Key says the GCSB looked into the residency issue but was incorrectly informed by the bureau’s top lawyer that the surveillance was legal. Key says he only learned that the GCSB had illegally intercepted Dotcom’s communications last September.

Robertson alleges that the raid on Dotcom’s NZ$30M mansion in Coatesville was too high profile for the prime minister to have been left in the dark for such an extended period of time.

"If he was not told, then this has all the hallmarks of a cover up, given the timeline of events in the court documents,” he said.

“Further affidavits given to the Court by GCSB show that they discovered on 22 February that Mr Dotcom was a resident and the spying was unlawful. The documents show that GCSB lawyers subsequently incorrectly - and inexplicably - decided that it was lawful," Robertson continued.

When asked by reporters on Wednesday whether he should have been informed of the legal concerns as early as February, Key said that he is never involved in operational matters. He further claimed that while the surveillance of Dotcom was illegal, he did not believe it was ill intended.

Earlier this month, New Zealand's Court of Appeal ruled that DotCom’s lawsuit against the GCSB for being illegally watched could proceed. Hours after the ruling, Dotcom tweeted that the GCSB had illegally passed on information about him to the US National Security Agency.

“All illegal surveillance gathered on us by New Zealand spies was stored in a U.S. based spy cloud operated by the NSA as part of #Echelon,” Dotcom tweeted.

He further alleged that the GCSB was spying on behalf of the US government.

Dotcom, a German native who received New Zealand residency in 2010, is currently fighting extradition to the United States, where he is wanted for his part in running what the Department of Justice (DOJ) calls an “international organized criminal enterprise.”

The DOJ alleges that via “Megaupload.com and other related sites,” Dotcom, along with six other individuals, helped generate more than $175 million in criminal proceeds and caused “more than half a billion dollars in harm to copyright owners.” He is wanted on digital piracy and money laundering charges.

This month the United States won a court appeal in its battle to extradite Dotcom by overturning a previous ruling which would have forced the US to give the internet entrepreneur access to key evidence before his extradition hearing in August.

Dotcom tweeted that he was disappointed by the ruling, but continued: "The fight goes on. Next is the Supreme Court of New Zealand."