The man tasked with co-ordinating intelligence agencies attended a meeting at which police told the Government's spies that surveillance of Kim Dotcom may have been illegal.
Organised Financial Crime Agency of New Zealand officers and Government Communications Security Bureau agents met on February 16 for a debrief of Operation Debut, the raid on Dotcom's home.
Intelligence co-ordinator Roy Fergusson confirmed yesterday that he attended "part" of the debrief - but can't remember "any legal issues or concerns being raised".
The GCSB's legal department reviewed the case in February, but concluded the spying was legitimate. However, Dotcom and his co-accused, computer programmer Bram van der Kolk, are permanent residents, and protected from the activities of the foreign intelligence agency.
The illegality became public last week when Prime Minister John Key ordered an investigation by Inspector-General of Intelligence and Security Paul Neazor.
Labour leader David Shearer has questioned why Mr Fergusson's Intelligence Co-ordination Group (ICG) did not brief Mr Key on the spy agency's unlawful snooping before September 17, when he was first told.
A performance review of the GCSB was a "cynical attempt to cover over serious concerns about the agency", he said.
From today Cabinet secretary Rebecca Kitteridge is seconded as the new associate director of the bureau. The senior DPMC staffer will spend three months on a review.
Mr Shearer said the review was damage control. Justice Neazor's report, released on Thursday, was "rightly condemned for ignoring the major issues".
"But this second review is nothing more than an internal audit, as if all that had happened was that the GCSB had committed a minor mistake."
Ms Kitteridge is currently secretary to the Department of Prime Minister and Cabinet, within which sits the ICG - headed by Mr Fergusson.
"The ICG is the body supposed to co-ordinate the activities of all our spy agencies. Asking her to conduct the inquiry will mean the wider accountabilities through to the prime minister will never see the light of day," Mr Shearer said.
Mr Key said yesterday that Ms Kitteridge's findings were not likely to be made public.
A media statement from the State Services Commission said Ms Kitteridge's work "will provide assurance to the GCSB director that the bureau's activities are undertaken within its powers, and that adequate assurance and safeguards are in place."
A spokeswoman for DPMC said the ICG was "not involved in operational details, including in the authorisation of surveillance”.
WHO IS REBECCA KITTERIDGE?
A former lawyer, Ms Kitteridge has advised four prime ministers and four governors-general.
Appointed Secretary of the Cabinet and Clerk of the Executive Council in April 2008, she advises the cabinet on ethics and conduct as well as constitutional matters.
A long-time public servant, she also worked in the legal department of the Foreign Affairs Ministry.
She briefly acted as DPMC head earlier this year.
In June, she apologised when the full list of the Queen's Birthday Honours was published online prematurely.
Deputy cabinet secretary Michael Webster will step up in her absence.
- Fairfax Media