US, NZ intelligence agencies spied on Megaupload’s Kim Dotcom

The New Zealand government has ordered an urgent inquiry after discovering its most secretive intelligence agency was eavesdropping on the communications of targets in the controversial FBI sting against Megaupload founder Kim Dotcom (aka Schmitz) earlier this year.

The Government Communications Security Bureau is part of the ECHELON international surveillance system used by the US, Australia, NZ, Britain and Canada to intercept global communications traffic, and intelligence sources say the GCSB’s involvement is a sure sign the United States was using the Kiwis to listen in, given that the entire operation was driven by the US.

Under US law the NSA and other agencies are forbidden from intercepting the communications of US citizens domestically, but the ECHELON system provides a work-around of “plausible deniability”, whereby the intercept is done by foreign agencies outside the US and the information then “shared” with American intelligence officials.

The full text of the New Zealand Prime Minister’s news release follows:

Prime Minister requests inquiry

Prime Minister John Key today announced he has requested an inquiry by the Inspector-General of Intelligence and Security into the circumstances of unlawful interception of communications of certain individuals by the Government Communications Security Bureau.

Mr Key says the Crown has filed a memorandum in the High Court in the Megaupload case advising the Court and affected parties that the GCSB had acted unlawfully while assisting the Police to locate certain individuals subject to arrest warrants issued in the case. The Bureau had acquired communications in some instances without statutory authority.

After being informed about the matter by the Director of the GCSB on September 17, the Prime Minister referred the Bureau’s actions to the Inspector-General, Hon Paul Neazor. The Inspector-General is an independent statutory officer with the power to enquire into any matter related to a government intelligence agency’s compliance with the law.

Mr Key says he has also asked the Inspector-General to recommend any measures he considered necessary to prevent the issue from happening again.

Mr Key expressed his disappointment that unlawful acts had taken place.

“I expect our intelligence agencies to operate always within the law. Their operations depend on public trust.

“I look forward to the Inspector-General’s inquiry getting to the heart of what took place and what can be done about it,” says Mr Key. “Because this is also a matter for the High Court in its consideration of the Megaupload litigation, I am unable to comment further.”