Labour leader David Shearer says MP Shane Jones had to stand down because politicians are guilty until proven innocent.
The list MP yesterday stood aside from his roles as Labour's front-bench spokesman on regional development, fisheries and Maori economic development after Shearer asked the Auditor-General Lyn Provost to investigate why he controversially granted citizenship to a Chinese millionaire accused of passport fraud.
A High Court at Auckland judge will today release a decision on the charge against Yong Ming Yan, also known as Bill Liu, following a trial which raised questions about why Jones approved his application against the advice of officials.
Shearer this morning said he had suggested to Jones the only option open to Labour was for him to have his case investigated independently by the Auditor-General.
"They can go right into all the details and Shane can clear his name," he told Radio New Zealand.
It was clear during the week that despite Jones' explanations for his actions, they weren't "cutting through".
"When an MP's under investigation, then they should properly step down until that investigation is complete."
Today's ruling on Yan's court case would not affect any investigation undertaken by the Auditor-General, Shearer said.
"Ultimately the question being asked of Shane Jones is whether he followed the right process.
"From what Shane has said to me and from the paper work I have seen, I think he did."
It could take up to a month for the Auditor-General to decide whether she would investigate.
However, Shearer said Jones would still be able to take part in Parliamentary debates and undertake electorate work.
It is second time the 52-year-old former minister has stood down from Labour's front bench: he stood down voluntarily in 2010 after it was revealed he charged hotel porn movies to his ministerial credit card.
Jones said yesterday there had been some "nauseating things" said about him during Yan's court case.
"I am largely regarded as a colourful character but a fairly upfront sort of a person and I've had my fill of being subject to allegations. I will give my side of the story, believe you me."
He has said he approved Yan's citizenship application on "humanitarian grounds" because he would be arrested, executed and his "organs harvested" if he returned to China.
An Internal Affairs spokesman said yesterday the department was now searching its files to find reference to the claim which was not in the original case file sent to Jones.
It is unclear whether a failed bid for citizenship would have resulted in Yan being sent back to China.
Yan was wanted by the Chinese government over accusations of embezzlement of about $2.7 million and was red-flagged by Interpol at the time of his application.
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