By Tova O’Brien
The country's spies have been caught breaking the law by eavesdropping in the Kim Dotcom case.
At the centre of the scandal is the Government Communications Security Bureau (GCSB), which is only supposed to gather foreign intelligence.
But it acted unlawfully in the way it intercepted communications as part of the police operation against the internet millionaire.
With helicopters, police, dogs and an arsenal of weapons - the raid on Dotcom's mansion was spectacular. However the search and seizure warrants were later ruled unlawful, and now we're told Government spies also acted illegally. It puts John Key in a very uncomfortable position
As Prime Minister, Mr Key is responsible for the GSCB, and Labour leader David Shearer has criticised him following the revelations of lawbreaking.
“It's extraordinary – John Key is either not telling the truth, or he's incompetent in not managing his own agency, or this agency has gone rogue,” says Mr Shearer.
Mr Key always maintained he'd never even heard of Dotcom until the day before the raid, and he's standing by that.
The Inspector General of Intelligence and Security, Paul Neazor, will investigate the breach.
But security expert Nicky Hager says the GCSB is such a secretive agency that even the findings are unlikely to be released in full.
“The trouble is we have no way ever of knowing or checking if they are obeying the law," he says. "We have to trust them.”
Dotcom is welcoming the inquiry, remarking on Twitter that he’s now “a real life James Bond villain in a real life political copyright thriller scripted by Hollywood and the White House”.
Green Party co-leader Russell Norman says today’s revelation shows how far the GCSB is willing to go for its intelligence ally – the United States.
“The US government says ‘jump’ and the GCSB says, ‘How high?’ Whether it's lawful or not doesn't seem to matter,” he says.
But this will matter to the Crown case against Dotcom.