GCSB acted illegally on Kim Dotcom
Police will not press criminal charges over illegal spying by the Government Communications Security Bureau.
However, police found one communication relating to Kim Dotcom was illegally intercepted by GCSB agents.
Because this was not done with "intent" they are not criminally liable.
Green Party co-leader Russel Norman had laid a complaint over illegal spying on internet mogul Dotcom and his piracy co-accused Bram van der Kolk last year.
A further complaint - about surveillance on 85 Kiwis revealed in the Kitteridge report - was not investigated by police.
Norman said it is a "sad day" when spies break the law and are not held accountable. "There appear to be different standards for the Government's spies compared to the rest of New Zealanders when it comes to obeying the law," he said.
He believes there was no question of intent. "They intended to intercept the communications and they did that. That was illegal. The police did not have to establish that the spies intended to break the law, but the fact is they did through their actions."
He has called on the GCSB to inform the 85 Kiwis they were the subject of surveillance and for what reasons. Until now the bureau has refused to confirm any details.
Norman believes the foreign spy agency had breached a section of the Crimes Act which covers the interception of private communications.
Detective Superintendent Peter Read, the head of "Operation Grey" which investigated Norman's complaints, said police had identified shortcomings in the handling of interception requests between the GCSB and police's Organised and Financial Crime Agency.
OFCANZ had detailed information which should have been passed to police, he said.
And the GCSB had had an "incorrect understanding" of immigration laws.
Staff also did not follow their own internal processes in dealing with OFCANZ requests, he said.
The GCSB was barred from spying on Dotcom because he was a New Zealand resident. Prime Minister John Key has apologised for the breach.
Dotcom is fighting extradition to the US on Internet piracy charges. The remainder of illegal spying took place because GCSB misinterpreted the law for 10 years.
The Government last week passed legislation that permits the GCSB to spy on Kiwis on behalf of other law enforcement agencies and to guard against cyber attacks.
Labour's deputy leader Grant Robertson said that the when the state acts illegally there should be accountability.
The spy agencies had been "left to their own devices", he said. "The GCSB has intrusive powers. How can the public have confidence that their privacy will be respected if there are no consequences when the GCSB breaks the law?"
Labour is calling for an independent inquiry into New Zealand's intelligence services.