The spying campaign began in January and continued until April 26, when it became clear Groser had missed out on the job. Photo / Mark Mitchell
The GCSB spying mission targeting those competing against former Trade Minister Tim Groser's for the job of running the World Trade Organisation was personally approved by the minister, a new report has revealed.
The report found the process to be "unusual" and outside the normal method for approving intelligence targets.
Inspector General of Intelligence and Security Cheryl Gwyn said the mission was dreamed up by the GCSB's former director Ian Fletcher and put directly to Groser, who approved it then directly received the intelligence harvested from those also bidding for the job.
She said there was nothing illegal about the spying mission because it lined up with the bureau's job of supporting New Zealand's "economic well-being".
The "economic well-being" came from the belief that New Zealand's national security would be served because Groser would do a better job of running the WTO than others.
But she also found that the way the mission emerged and was approved was outside the GCSB and Government's normal way of identifying intelligence targets - and that there was patchy record-keeping and poor memories of how it came about.
The Herald broke the news of the spying campaign in 2015 based on documents from the trove of papers taken by whistleblower Edward Snowden from the United States' National Security Agency.
It resulted in a complaint from Labour leader Andrew Little to Gwyn's office, saying he couldn't see how Groser getting a top international job as the neutral arbiter of the WTO fitted with the GCSB's requirement to protect "national security" and "economic well-being".
Gwyn's report found that the idea of spying to support Groser's bid for the WTO job came from Fletcher, who was appointed to his role by Prime Minister John Key.
The appointment attracted controversy after it emerged the pair went to school together in Christchurch and their mothers were best friends.
Fletcher sought out a meeting with Groser and his staff to see if they would be interested in having the bureau carry out an intelligence gathering operation, Gwyn's report said.
There were meetings on November 28, 2012 and on December 5.
At the first meeting, "the director explained his offer and Mr Groser expressed his acceptance".
Just over a week later Groser's staff met GCSB staff to brief them on "matters of interest" to the minister's WTO campaign.
Both meetings took place before Cabinet agreed to nominate Groser for the WTO job on December 5 and before the Prime Minister announced the decision on December 21.
Cabinet's decision to support Groser's bid for the job was not supported by any briefing material, but Gwyn said MFAT told its diplomats around the world the WTO was of "fundamental importance to the economic prosperity of New Zealand and the wider international community".
MFAT's view was that there was an "urgent need for the WTO to have capable leadership" after the breakdown in trade negotiations in 2008 and a "moribund WTO" created economic risks for New Zealand.
She said it showed there was a belief that New Zealand would benefit by the better running of the WTO with Groser at the helm.
Gwyn's report said the legislation governing the GCSB recorded one of the bureau's objectives as to contribute to the "economic well-being" of New Zealand in a way that contributed to national security.
Her report said there was no strict definition of "national security" in the law so it was up to the Government to decide New Zealand's "national security" interests as a matter of policy.
Whether the spying would actually improve "national security" was not considered as part of the inquiry but instead she studied whether the decision was made objectively on evidence.
She said there was evidence it had been, and although the director-general's job did not "serve as a national advocate for his or her country" there were "general economic benefits" to New Zealand from a successful campaign to get Groser into the job.
The spying campaign began in January 2013 and continued until April 26, when it became clear Groser had missed out on the job. The intelligence gathered went to Groser, officials at the Ministry of Foreign Affairs and Trade and the Prime Minister through weekly briefings.
Gwyn said the offer to spy on competitors for the WTO job was different from the normal process followed at the time, which saw the GCSB tasked to intelligence-gathering priorities determined by the high-level group in the Department of Prime Minister and Cabinet.
She said while the WTO spying mission didn't follow "informal but robust" practices at the time, that did not mean it was unlawful or outside government requirements.
Gwyn said intelligence targets were usually set by the Domestic and External Security Coordination system - a high-level group of officials run by the Department of Prime Minister and Cabinet - which gave the GCSB direction on where it should focus.
The WTO mission didn't come about that way - instead having Fletcher discussing his idea with senior GCSB managers before putting it to Groser.,
Gwyn found Fletcher kept no paperwork of the decision-making process around the spying mission and the managers said to be consulted could not remember discussions on how the WTO mission stacked up against intelligence gathering priorities set by the normal system.
Her report stated "incomplete records and the limited recollections of those involved" meant the details of spying for Groser's bid for the WTO job "is not complete in every detail".
But she also said she was not critical of the limited recollections of those at the bureau because of the time that had passed and the workload they carried.
Gwyn said there should be a system to deal with intelligence-gathering missions that fell outside the usual measured approach to determine New Zealand's foreign spying priorities.
She said it needed to be clearly documented to show how such plans emerged and how they were approved.
Gwyn said the personal benefit to Groser if he got the WTO job didn't make a spying request improper.
She said evidence before her showed officials saw the benefit in having a New Zealander in the role of WTO director-general.
However, she said that cases in which there was a question of personal benefit or political neutrality - which she also said was not breached - needed to be documented with reasoning for the missions being approved.
It was particularly important because the bureau did not need a warrant or ministerial permission to carry out spying on foreign targets.
Gwyn said the way in which the WTO spying operation came about was "unusual" because it was put directly by Fletcher to Groser then assigned to an operational manager to carry out.
In doing so, it skipped the normal process which would see an "outreach manager" manage requests for intelligence gathering and measure those against the GCSB's governing law and the priorities it had.
Fletcher was "mindful of the importance of being useful and relevant to customer agencies".
"He saw his approach to the minister as being relationship management."
He said he had no personal involvement with the spying campaign and no "formal discussions" with Groser after his November 2012 meeting with the minister.
He said he might have discussed it with the Prime Minister "at least once" and Key would have received updates in weekly intelligence briefings.
Fletcher also thought it likely it would have been raised at meetings with his senior management team but "no records were kept of these".
Andrew Little, who lodged the complaint, said he accepted there might be an economic benefit to Groser getting the job but it wasn't a national security issue - the key point on which it needed to be linked.
"I disagree with her conclusion about whether or not this was in the interest of national security. I just don't accept it.
"Gathering intelligence on a NZ candidate for an internatinal job, in my view, doesn't contribute to enhancing NZ's national security."
A severe thunderstorm watch is in place for the region tonight.