The need to provide an undertaking in March and April 2012 surprised the Crown and the Herald sought details of the debate and consideration over the risk to which NZ was exposed through the Official Information Act in July 2012. Treasury refused to supply the information sought so the Ombudsman was called on to investigate.
After three years of deliberation, Chief Ombudsman Dame Beverley Wakeham found there was a "public interest" which would be met by releasing a summary, which Treasury sent to the Herald this month.
The summary showed there were meetings "to discuss the case and how to inform ministers" were held Crown Law, police, the Ministry of Foreign Affairs, Ministry of Justice and Treasury.
On March 22 2012 Finance minister Bill English was told he "did not have a role in approving or signing off this kind of undertaking". Instead, it was the Commissioner of Police's role under the Criminal Proceeds (Recovery) Act.
While Mr English was kept briefed - including a briefing from Mr Marshall and Attorney General Chris Finlayson - there was no process established through which he was able to be formally involved in the undertaking.
Under the Public Finance Act, Mr English is responsible for matters which might impact on Crown accounts. Dotcom has claimed the loss of Megaupload cost him more than $2 billion although others have argued the impact is far less.
The summary provided to the Herald said there had been a review of the mutual legal assistance framework of which Treasury was a part. It "intended to use the forum to recommend the establishment of a consultation process and set out criteria for issuing undertakings".
The requirement to give an undertaking to the court to meet any damages was a factor which put Sony off joining a civil case seeking to claim Dotcom's assets, emailed hacked and released last year revealed. Sony's top copyright lawyer, Aimee Wolfson, said it was "not at all unimaginable" Dotcom would avoid extradition or even successfully defend himself in the United States.
The studio is not a participant in a case in NZ courts with discussion in the emails showing potential exposure to a legal suit from Dotcom concerning executives.
The risk to which New Zealand is exposed was underscored by a legal opinion released today from Harvard University's professor of law Lawrence Lessig, one of the world's leading experts on copyright law. He said the FBI charges would not stand up in US courts and there was no basis in law for Dotcom to be extradited.