New Zealand PM apologises to Kim Dotcom for spying bungle

New Zealand Prime Minister John Key apologised yesterday to internet tycoon Kim Dotcom over an "unacceptable" bungle by government spies leading up to the arrest of the Megaupload boss.

Key also ordered agents from the Government Communications Security Bureau (GCSB) to review their cases over the past three years to check whether there were other instances of communications being intercepted unlawfully.

The apology came as a report into the illegal monitoring of 38-year-old Dotcom blamed the agents for not being aware of New Zealand immigration laws and relying on erroneous information from the police.

"I'm pretty appalled. The organisation should be able to get this right," Key said. "Of course, I apologise to Mr Dotcom. I apologise to New Zealand."

The GCSB, which is forbidden from spying on New Zealanders or permanent residents, had been asked by the police last year to monitor Dotcom, who is wanted in the United States on internet piracy charges.

When they asked police if they could legally monitor Dotcom, the report said they were assured they could, although the German national held a New Zealand residence visa at the time.

"If things had been done properly it would have been quite clear [Dotcom] was protected," Key said. "It is quite a basic error. They have failed at the lowest hurdle. It's not good enough."

Key had ordered the report into the spying debacle after it was learned the GCSB had unlawfully intercepted communications for a month in the lead-up to Dotcom's arrest in January.

"It is the GCSB's responsibility to act within the law, and ... in this case its actions fell outside the law," Key said.

Dotcom is fighting extradition to the United States where the US Justice Department and FBI claim Megaupload and related sites netted more than US$175 million in criminal proceeds.

The also claim Dotcom, who changed his name from Kim Schmitz, had cost copyright owners more than US$500 million by offering pirated copies of movies, TV shows and other content.