The Ministry of Health has apologised to the Associate Minister of Health Casey Costello for failing to inform her that one of its officials advising her on tobacco reform had a conflict of interest.
The ministry said that it was its responsibility and stressed that the staffer in question had followed the correct guidelines.
It comes after NZ First leader Winston Peters named the official in Parliament's debating chamber, accusing her of attending meetings with Costello without telling her she was the sister-in-law of Labour's health spokesperson Ayesha Verrall.
Speaking to reporters on Thursday afternoon, Peters also suggested - without providing evidence - the official had been leaking material to assist Labour's attacks: "Now I know where half the rubbish came from."
"Something has seriously gone amok. It's seriously bad. It's wrong. It's corrosive ... and now it's been exposed," Peters told media.
In a statement to RNZ, acting director-general Maree Roberts said the ministry official had adhered to its conflict of interest rules, but the ministry had failed to then "specifically" pass on the conflict to Costello.
"This was the responsibility of the Ministry of Health. The ministry has apologised to the associate minister of health for this oversight.
"The ministry does have a conflict of interest protocol which is well-communicated to all staff and was adhered to by the individual in this case."
Returning to Parliament on Thursday, Peters took the opportunity to identify the ministry staffer.
"The official I mentioned in my general debate is Ayesha Verrall's sister-in-law … who attended multiple meetings with the minister, worked on tobacco reform legislation advice, and who did not declare to the minister that she was a close relative nor did she declare that there was a massive conflict of interest.
"The deceit and underhandedness shown by Verrall throughout her constant political attacks and smear campaign against one of my ministers [is] now writ large."
Peters told reporters he had contacted the Ministry of Health himself to ask, "What on Earth is going on here?," but had yet to get a reply.
Asked whether he had any proof the official had leaked material, Peters responded: "For goodness' sake, I'm not going to entertain you people."
"I've given you game, set, and match," Peter said. "I've never seen as bad as this: An insider, in there for 11 months, not telling the minister what her critical role was."
In a statement, Labour leader Chris Hipkins said Peters' actions were "yet another example" of the government's contempt for workers.
"Winston Peters has dragged another MP's family into a political debate and named and attacked a public servant who can't answer back."
In a statement issued the day before, Verrall said she was "confident" the conflict had been managed appropriately.
"Many people who work in politics have relatives in the public sector. That's the reality of living in a small country like New Zealand. They do their jobs professionally and any conflicts of interest are managed with their individual employers."
Also speaking on Wednesday, Hipkins described the official as a "distant relative" and said he had been assured by Verrall there was "no issue here".
He challenged Peters to provide evidence to back up his claims.
"Any conflicts have been declared and managed, so the allegation that there's an unmanaged conflict here, which seems to be what Winston Peters was implying, is a fairly serious one."
