McGlashan's email stated the payments "are not typical" of a charitable trust and will "no doubt need explaining" when the charity's accounts were being prepared.
Charities service general manager Lesa Kalapu defended the length of the investigation, and lack of a resolution, saying there had been delays because Sir Owen lived overseas. "Purely because of the scale, and the international aspect to it, there were delays." She said there was a "fair level of co-operation".
Sir Owen told the Herald on Sunday negative media coverage had forced him to leave New Zealand.
"It's why I pulled out my foundation from New Zealand, mate, all the things I'd hoped to do there.
"I'm still doing it privately in my own way one to one but New Zealand, thanks to you guys, has lost me."
In July 2012, the multimillionaire businessman said he would donate $8 million to community organisations in South Auckland through his charitable trust.
But many projects were never delivered, as Sir Owen focused on his Glenn Inquiry, which released its findings this month.
Charity expert Michael Gousmett has labelled the failure to pursue the investigation a cop-out.
"To brush it under the carpet, [Internal Affairs] is basically abdicating their responsibility," Gousmett said.
"They tend to pick on the low-hanging fruit and you would have to question what the real purpose of the regulator is."
Labour Internal Affairs spokesman Trevor Mallard said Internal Affairs had been reluctant and "very, very slow" to prosecute charities. Watchdogs such as Internal Affairs were often outgunned.
"The lawyers who are working for people who are setting up these sometimes charitable - sometimes allegedly charitable - are getting paid 10 times more than the Crown lawyers."
Since the Charities Service came under the Department of Internal Affairs in July 2012, 1070 charities have been voluntarily deregistered.
Daughter's sad history
Sir Owen Glenn's daughter has "been through the fires of hell" with a record of drug-fuelled criminal offending.
While the multi-millionaire has been campaigning to rid New Zealand of child abuse and domestic violence, he has experienced first-hand the ravages of drugs in his family.
Michelle Elise Glenn, 32, has been arrested and jailed in the past two years for crimes including heroin possession, according to documents provided by the California District Attorney.
Most recently, she was released in May after spending three months in jail for possession of heroin, hypodermic needles and an opium pipe.
She was also charged with drink driving.
Last year, the mother-of-two, was arrested by the Orange Police Department for possession of methamphetamine, heroin and an opium pipe.
The year before she and two men were charged with 10 felony counts, including possession of materials to make counterfeit notes and burglary of a restaurant and chemist, District Attorney Tony Rackauckas said.
It is unclear from the documents whether she was convicted on these charges.
Michelle was born in California, the fourth of six children, to Sir Owen's second wife, and lists Redondo Beach in southwest Los Angeles as her home town.
Speaking from Sydney, Sir Owen told the Herald on Sunday: "My daughter has been through the fires of hell."
Sir Owen was reluctant to discuss his daughter's offending in greater detail.
"You don't even know one per cent of the story of what happened to her. I'm not going to talk about my private life."
