Police asked Government spies to snoop on Kim Dotcom, just-released court documents show.
A memorandum filed to the court by the Crown has just been made public.
A storm of controversy has erupted after it was revealed the Government Communications Security Bureau illegally intercepted communications from Dotcom and his co-accused.
Earlier it was revealed that finance minister Bill English knew spies were involved in the Kim Dotcom case before Prime Minister John Key was alerted.
It also emerged that the government signed an indemnity order which makes taxpayers liable for all costs should the Megaupload millionaire choose to sue over illicit eavesdropping.
Government Communications Security Bureau agents illegally intercepted communications from the internet mogul and his co-accused Bram der Volk. Key was briefed by GCSB last Monday and ordered an inquiry.
The blunder became public yesterday once documents were lodged at the High Court.
But Key admitted today English was alerted to the involvement of spooks in August, while acting prime minister. Key was in the US watching teenage son Max compete in a baseball tournament.
The role of the secretive GCSB began to unravel when Dotcom's lawyer Paul Davison asked for the identity of mystery individuals at a meeting before police and FBI agents raided the entrepreneur's Coatesville mansion in January.
After the court hearing English signed a 'ministerial certificate' - an administrative document - relating to the court case.
Neither Key nor English can recall the exact date. But Key left for a ten-day trip on on August 9 - the same day the mysterious group was first revealed in court.
''There was a ministerial certificate that was signed. That's another technical issue, I haven't actually seen the paper work on that, that would have indicated that the bureau was involved,'' Key said this morning.
''A ministerial certificate is in relation to information about whether the bureau has acted, because a court, or someone might ask, for that information. So, it's essentially a suppression order.''
Both the GCSB and English were unaware at the time that the covert eavesdropping was illegal. GCSB were alerted five days before Key - there was a delay in briefing him because director Ian Fletcher was overseas.
The bugging is believed to have taken place under former head Simon Murdoch, who was director of GCSB between July 1 2011 and December 19 2011.
Key defended the bureau. ''The entire time I've been the minister there has never been another issue for which I've had concerns. I think they've got a very thorough processes. They actually self-identified this potential error.''
Key has refused to say who ordered the bugging. And he won't say if it was at the behest of the FBI.
''They act under their own instructions,'' he said of the GCSB.
English said he had signed the certificate but couldn't recall the detail. He is ''not all concerned'' about what the report might uncover.
''The issue is being dealt with pro-actively both by the agencies and by the Prime Minister.''
Asked today if he had signed the indemnity order English said he needed to check documents before he could comment.
"I've been involved in the adminstrative processes related to this thing; but I wouldn't comment till I've had the opportuntiy to go and have a good look, what was involved, what advice was given."
Police Minister Anne Tolley said she had a verbal briefing from police last week.
"They will make their case at the inquiry ... They're confident they did [follow the law] but there is an inquiry and so we will await the outcome of that."
Asked if police may have been at fault for not checking Dotcom's residency status, Tolley said she did not want to pre-empt the inquiry.
"I think what the inquiry will say is who checks and who did what checks," she said.
- The Dominion Post
Where do you stand on political coat-tail riding?Related story: Voters reject riding on the coat-tails