Immigration Minister Michael Woodhouse said he was limited in what he could say about applicants but said he would confirm some details because of public interest and the reporting of incorrect facts in the media.
In a news item on Radio New Zealand, Kabul-based reporter Jon Stephenson said Hamid, from Kabul, had been kidnapped by insurgents soon after New Zealand's Provincial Reconstruction Team (PRT) withdrew from Afghanistan.
The Afghan was kept in a basement of a house in a rural village. During this time he was hung from the ceiling and beaten with a piece of wood tied to a rubber hose and was later waterboarded - a torture technique used by US forces.
It was reported that he escaped after three days but he and his family continued to be threatened by insurgents.
Mr Woodhouse's office could not discuss the claims about his kidnapping, but said that as a contractor he did not qualify for a resettlement package. Cabinet's criteria for resettlement included that a person must have worked as an interpreter for the PRT in its last two years of deployment.
It made some exceptions for interpreters who had worked for the Special Air Service (SAS).
Hamid worked for a logistics company that was contracted by the Defence Force to service its vehicles and supply goods. New Zealand troops dealt with him only on a monthly basis and he mainly worked with US forces.
"On the basis of all the information provided to me, I have declined the request," Mr Woodhouse said. "Character concerns and irregularities with documentation have also been raised."
Correspondence released under the Official Information Act showed that military officials said some of the contractor's claims were "complete rubbish" and that Hamid had exaggerated his work with the Defence Force.
"In short I think Mr [redacted] is overselling himself and overstating his role with the NZDF in Afghanistan. Most of [his] work was with the US forces."
The documents appeared to show that he had provided a false letter of recommendation.
The Government has already offered resettlement packages to 46 interpreters and 100 family members, some of whom have begun new lives in New Plymouth and Hamilton.
Calling NZ home
April 2013
• New Zealand Provincial Reconstruction Team withdraws from Bamiyan Province, Afghanistan
• 30 PRT interpreters and 64 family resettled in Hamilton and New Plymouth
Oct 2013
• Nine PRT interpreters and 26 family confirmed for resettlement
Last month
• Six SAS interpreters and 10 family confirmed for resettlement