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Housing Minister Chris Carter has told his department to move faster after it sat for 10 months on a fraud investigation.
The case involves a tenant who was given a state house in Mangere Bridge in March 2004 when he had a Bay of Island holiday home.
The tenant later sub-let the state house.
National MP Phil Heatley raised the case in Parliament, quoting papers obtained under the Official Information Act, which revealed the tenant owned a holiday home worth about $300,000 in Russell when he was given the state house.
They also showed he had sublet the state house for $210 a week from October 2005 - a $70-a-week profit on the $133 rent he was paying.
Mr Carter said earlier in the week that Housing NZ had investigated as soon as it was made aware of the subletting, and had already referred the matter to Crown prosecutors.
But yesterday he said he was wrong, and the matter had not been referred for prosecution until yesterday - a day after Mr Heatley raised the case in Parliament.
Mr Carter said that although the investigation was completed by last August and an investigation committee considered the case in October, it had sat on a desk in the department since then.
Mr Heatley said there were many unanswered questions about the case, including why Housing NZ had not found out about the Bay of Islands home when the man applied for a state house.
Mr Carter said the tenant had refused to talk to Housing NZ and it had taken until early this month to establish that the tenant owed Housing NZ $32,650.
He said in Parliament he was "as confident as I can be at this stage that Housing New Zealand did not know that the applicant was making a false declaration about his assets".
Mr Carter said the year-long process was too lengthy, and he had told the Housing NZ board to review its processes and report back on July 27.
"I am determined that all of our good work will not be undermined by sluggish investigations of the very, very few people who seek to deceive and defraud."
The Housing NZ papers Mr Heatley obtained said that as well as the sub-letting, there was evidence the tenant had not revealed his true assets and income when applying for the house and for income-related rent.
In Parliament, Mr Heatley also called for checks on a neighbour's comment to Housing NZ that the man got the house because "he knew someone in housing".
"That is a serious allegation of corruption," he said.
"It requires further explanation and investigation."
The Herald was unable to contact the tenant on his cellphone or through a family member.
Mr Carter said cases of fraud in Housing NZ were "incredibly rare".
It had 160,000 tenants in 67,000 homes and over the past five years there had been 38 prosecutions for fraud-related offences. Nine more were before the courts and decisions on prosecution were pending in 39 cases.
