The inquiry into the use of external security consultants - or spies - has found failings across the public service, including breaches of the code of conduct.
But it didn't find evidence of widespread inappropriate surveillance on behalf of Government agencies.
The inquiry was sparked by allegations that Thompson and Clark was spying on Christchurch earthquake claimants, on behalf of Southern Response - a Government-owned company responsible for settling the claims of AMI customers.
The inquiry found Southern Response acted inconsistently with the code of conduct in early 2014, when a Thompson and Clark contractor attended several closed meetings being held by insurance claimants. That contractor recorded those meetings, despite not being a licensed private investigator, which may also have been unlawful.
It also approached public servants with access to sensitive information and offered them work, and advised a client not to disclose the source of information obtained inappropriately to police.
A complaint has been laid with police regarding potentially unlawful recordings. A formal complaint has also been lodged with the Private Security Personnel Licensing Authority, regarding the use of an unlicensed investigator.
The inquiry also found breaches of the code by other Government agencies including MPI staff who also worked for Thompson and Clark as second jobs, breaching the code of conduct. An enquiry by the Serious Fraud office is underway.
It also found breaches of the code by the NZTA, the Ministry of Social Development and MBIE.
Greenpeace had earlier queried a close relationship between MBIE and Thompson and Clark.
State Services Commissioner Peter Hughes says any decision to use surveillance requires careful judgment and says: "It is never acceptable to undertake targeted surveillances just because people are lawfully accessing their democratic rights. That includes freedom of expression and the right to protect. That is an affront to democracy."
Mr Hughes has introduced new standards on gathering information for regulatory compliance and law enforcement, to improve transparency.
He says there are some legitimate reasons to undertake surveillance, which could include tax evasion or benefit or ACC fraud.
The inquiry looked at Thompson and Clark investigations, and others, and covered 131 state sector agencies.
It interviewed 100 people, some under oath.
Newshub.
