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2 YEARS

New Zealand Prime Minister Apologizes to Kim Dotcom

John Key reacts to a report that placed blame on NZ's intelligence agency for illegally bugging the Megaupload founder before his arrest in January. "I accept your apology," tweets Dotcom.

Kim Dotcom

After the release of a report that showed New Zealand's Government Communications Security Bureau spied on Kim Dotcom, the country's prime minister has extended his apologies to the Megaupload founder.

At a press conference, Prime Minister John Key said "basic errors" had been made, that he was "appalled" and added, "Of course I apologize to Mr. Dotcom, and I apologize to New Zealanders."

STORY: New Zealand Government Admits to Spying Bungle in Kim Dotcom Case

Dotcom is awaiting word on whether he'll be extradited to the United States on charges that he committed massive copyright infringement, racketeering and money laundering alleged to have caused more than $500 million in damages. In January, Megaupload was forced to be shut down, and Dotcom's mansion was raided. The U.S. government has detailed evidence in a criminal indictment in a Virginia federal court, including child pornography hosted on the site, the creation of redundant links to copyrighted work to allegedly elude a Hollywood crackdown, and internal e-mails purporting to show that Megaupload's executives were aware they were in the "pirate" business.

But U.S. prosecutors won't get to bring a trial against Dotcom unless he is handed over to American authorities.

In recent months, Dotcom has experienced some better fortunes. Among the developments: New Zealand High Court declaring the raid of his mansion and property confiscated to be "illegal"; a judge ordering the U.S. Government to hand over more evidence; and Dotcom gaining access to millions of dollars in frozen funds.

The latest is New Zealand's inquiry into why the nation’s foreign intelligence agency bugged one of its own citizens.

VIDEOS: Six Outrageous Kim Dotcom Moments

The result of that report led to Key's comments at a press conference on Thursday. The prime minister said that the GCSB had relied on the police's information about residency status and had interpreted the law wrongly. He said there was some confusion about Dotcom's immigration status.

The series of favorable decisions and sympathetic comments towards Dotcom in New Zealand have led to some speculating the case against the controversial Megaupload founder is "unraveling." That assessment could be premature given that the decision on whether or not to send Dotcom to the U.S. could amount to nothing more than how a New Zealand judge reads national and international law governing extradition. It's not clear whether illegal spying and illegal raids will factor into how a judge rules at a hearing scheduled next March.

Nevertheless, the Dotcom situation has caused a political uproar in New Zealand. After Key's comments, the leader of the opposition party, David Shearer, termed the spy report to be "a whitewash because it ignores the complete failure of democratic oversight by Prime Minister John Key."

For his part, Dotcom tweeted his response to Key.

"I accept your apology," he wrote. "Show your sincerity by supporting a full, transparent & independent inquiry into the entire Mega case."

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner