The Green Party says ACC Minister Judith Collins is being "thin-skinned'' by accusing two Labour MPs and a news organisation of defamation.
It follows the widening of the Bronwyn Pullar saga which has now forced Prime Minister John Key to reject claims he supported her claim for a $14 million private insurance payout after a cycling accident in 2002.
Collins has been repeatedly questioned about who leaked an email containing personal details about Pullar, who is also an ACC claimant.
Collins has said she is "100 per cent certain" there was no leak from her or her office.
Yesterday she sent letters to Labour MPs Andrew Little and Trevor Mallard, and to Radio New Zealand, threatening legal action over comments they made about the leak.
Greens ACC spokesman Kevin Hague said it "behoved" a minister to be accountable.
"And actually to have a pretty thick skin when it comes to suggestions of misconduct or inappropriate decision-making.
"I think there is a case to be made that she has been a bit thin-skinned but she is entitled to defend her reputation and certainly her reputation is, I'm pretty confident, being damaged by Labour's claims."
If Labour had evidence that Collins had leaked the information, it was in the public interest for them to release it, he said.
Little, Labour's ACC spokesman, said he and Mallard did not respond by yesterday's 5pm deadline and had no plans to.
Mallard said he did not want to comment on the detail in the letter from Collins.
"But we have decided not to take any action following the letters we've received."
He expected Collins would now consult a lawyer - the letter sent to the MPs was from Collins herself, not her lawyer, though she is an experienced lawyer.
NZ First leader Winston Peters said Collins was being a "tad hysterical".
TVNZ last night said it had a copy of a letter Sovereign Insurance sent to Pullar's friend and former National Party president Michelle Boag in 2007 about her claim.
It was written while Key was Leader of the Opposition and referred to being supplied with a list of 28 people in Pullar's "claims support/advisory team" including Key, former prime minister Jenny Shipley, former defence minister Wayne Mapp and other prominent people.
Key said this morning he was not involved in a support group for Pullar's claim.
"People drop my name all the time and it's factually incorrect," he told Radio Sport.
Pullar was involved with National and had been fighting ACC over her claim for some time, so he was not surprised to see the names of so many party members involved, he said.
Peters said the saga, which last week claimed the scalp of former Cabinet minister Nick Smith who wrote letters of support, was "getting worse as every day goes by".
The implication of Key in the saga would force a formal inquiry, he said.
"This goes to political propriety and if the Government wants to get out of this with any chance of a clean record it has to have a full-scale inquiry," he told TVNZ's Breakfast programme.
It's understood Collins had offered a deadline of 5pm yesterday for the MPs to apologise for their comments, but they ignored the offer and indicated they would not respond.
Mallard said it was an attempt to gag MPs and "something which can't be tolerated".
Little said it diverted attention from the major privacy breach by ACC in which details of more than 6700 ACC clients were sent to Pullar by accident.
Key said yesterday he had not discouraged Collins from taking legal action and as a minister she was "entitled to have support from the Crown" to pay for it.
Radio New Zealand said it had taken legal advice and responded accordingly.
Collins said she would take further action against the MPs and Radio New Zealand if there was no response to her letter.
- The Dominion Post
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