Labour leader David Shearer says he has accepted MP Shane Jones' assurances that he followed proper processes when he approved the citizenship application of Chinese businessman Yong Ming Yan.
Mr Jones approved the application as associate immigration minister in 2008, despite officials' advice that Yan, also known as Bill Liu, did not meet good character requirements.
Yan is currently facing trial on fraud charges and last week immigration officials told the court that when Yan was told he was unlikely to be given citizenship, he had said he had friends in Parliament.
Yan's citizenship was approved and a citizenship ceremony held for him in Labour's caucus room, organised by former Labour MP Dover Samuels.
Mr Jones has repeatedly refused to comment on the case. However, Mr Shearer said he had taken allegations seriously and had spoken to Mr Jones and other MPs who were aware of the case.