The lawyer for internet entrepreneur Kim Dotcom is dismayed police will not lay criminal charges over illegal spying by the Government Communications Security Bureau (GCSB).



Paul Davison QC told RadioLive this morning that the decision was surprising.



"I don't subscribe to the angry reaction but there's some dismay as to the decision from police," he said.



"The relevant section of the act does not require proof of criminal intent. It requires proof of intentional interception, by a person without lawful authority.



"As the GCSB did not have lawful authority, they most certainly did act with deliberate intention to intercept.



"So there's some dismay over the conclusion reached by the police.



Commenting on the decision last night, Green Party co-leader Russel Norman said the police had a conflict of interest in their decision.



Police said an investigation has found one communication relating to Dotcom was illegally intercepted by GCSB agents.



But Detective Superintendent Peter Read said yesterday there was no "criminal intent" - agents did not mean to break the law - so there would be no prosecution.



The illegal surveillance came to light during Dotcom's court battle against attempts to extradite him to the United States on internet piracy charges. Norman laid a complaint with police last year.



Yesterday he argued the investigation may have been coloured by a conflict of interest. The GCSB undertook the surveillance on behalf of the police's Organised and Financial Crime Agency (OFCANZ).



The investigation was reviewed by barrister Kristy McDonald, QC. Fairfax Media revealed in May that she is also defending police against Dotcom's legal claim to have hardware returned.



"There are clearly two very obvious conflicts of interests for the police," Norman said.



During a three-minute media conference yesterday, Read was critical of both OFCANZ, for not handing over "accurate and detailed" information, and of the GCSB for breaching its own internal procedure and not understanding immigration laws.



He refused to take questions, citing ongoing court action in the Dotcom case.



Davison said today that he didn't question McDonald's integrity in any way but queried the appropriateness of her being appointed to conduct the inquiry.



Police also refused to investigate a further complaint from Norman that 85 Kiwis were illegally spied on after the GCSB misinterpreted the law for a decade.



Norman said: "They haven't even bothered to investigate. They haven't even given these people a modicum of justice.



"We are now in the situation where a very powerful state agency has acted unlawfully on dozens of occasions and not a single person is to be prosecuted for that."



Acting Labour leader Grant Robertson said that when the state acted illegally there should be accountability.



"The GCSB has intrusive powers," he said.



"How can the public have confidence that their privacy will be respected if there are no consequences when the GCSB breaks the law?"



Labour and the Greens are calling for an independent inquiry into New Zealand's intelligence services.