Kim Dotcom says John Key lied, while the PM says the internet mogul is a conspiracy theorist.

The showdown had been eagerly awaited – Prime Minister John Key and internet mogul Kim Dotcom came face to face in Parliament over legislation extending the powers of the nation's spooks.



And it didn't disappoint.

"Why are you red, Prime Minister?" Dotcom asked Key.

"I'm not," Key retorted. "Why are you sweating?"

Pointing to the big woolly scarf around his neck, the Megaupload founder explained: "I'm hot."



Dotcom challenged Key over his repeated claim that the first he had heard of Dotcom was the day before a police raid on his Coatesville mansion on copyright charges.

Outside the committee, Dotcom accused Key of lying about not knowing about him until just before the police raid.

He could prove it, and would do so in court.

"He lied to all New Zealanders when he said he didn't know about me," Dotcom said.

Key later vigorously denied lying and attacked Dotcom's submission as ''a circus''.

Inside the packed room, Dotcom started by launching into an argument about having his 25-minute speaking slot reduced to 15 minutes.



Key, who is chairing the intelligence and security committee, refused to budge and told Dotcom to get on with it.

Dotcom urged the committee not to pass legislation extending the powers of the GCSB.

He pointed to his own experience of the nation's spooks as an example of what happens when they abuse their powers.



He is fighting extradition after New Zealand authorities raided his home at the instigation of the FBI in the United States.



The GCSB has been found to have spied on him illegally before the raid.

That set in train a series of events which ultimately led to legislation governing the GCSB being redrafted.



The committee is hearing evidence on the changes.



Ten minutes in the prime minister reminded Dotcom his time was nearly up and asked if he wanted to leave some time for questions or carry on.

"Carry on" was the terse response before Dotcom ploughed on with his submission.



In the end it was Key who gave ground – Dotcom's time extended past the 15 minutes as questions were asked.

Dotcom ended by reminding them they all had something to hide - a secret bank account in New York, a reference to Labour leader David Shearer, and a phone call from an "anonymous donor" – a reference to ACT leader John Banks, another member of the committee, who was embroiled in controversy last year over a $50,000 donation from Dotcom which he denied knowledge of.

The select committee room was packed for hearing and the audience included a number of MPs.

Earlier, Vikram Kumar, Mega chief executive, giving evidence as a private individual, criticised the bill and also referred to work he had done with the GCSB.

But when asked in what capacity, Kumar would only say as a "bureaucrat" in Government employment.

In other evidence, the committee heard from peace activists Dr Kate Dewes and Commander Rob Green that they had been under surveillance for decades, and their mail, email, telephone and computers had been interfered with

The couple also claimed their home had been broken into several times.

"It's been going on for 30 years and I have to say I'm actually quite sick of it," Dewes said.

The committee also heard from Internet New Zealand, which acknowledged that no-one's right to privacy was absolute.

"It remains important, in the face of this charged media climate, to acknowledge that the GCSB plays a critical and necessary role for the protection of New Zealand's national security, international relations and economic well being.

"To do so there will necessarily be inroads made into the right to privacy. Such inroads, however, must be accompanied by appropriate safeguards."

Outside Parliament, Dotcom said his aim in politics was to achieve better protection for New Zealanders.

"That's what I want to get involved for in politics and help a little bit with that. How exactly I haven't decided yet."

Asked if he would stand for mainstream politics, he said: "Probably not. I don't think the political game is for me, as being a politician. I think it is better to do things in the background."

Asked if he would fund a party, he said: "I can't say. It depends. These things have not been decided yet."

Speaking outside the committee, he said he also had proof that Key knew of him before the raid on his house.

He would have to "speculate" about whether Key knew about the GCSB involvement but he would think he did.

Afterwards, Key vehemently denied Dotcom’s claim that he had been aware of him ahead of the raid on his mansion.



‘‘He’s completely and utterly wrong. He’s said that on numerous occasions. He’s never ever found a shred of evidence to support that. He is a well known conspiracy theorist and he’s utterly wrong.’’



The submissions of Dotcom were ‘‘fundamentally wrong’’, Key said.

The internet millionaire had claimed the legislation would make the illegal surveillance on him legal, which Key said was incorrect.

Dotcom’s performance was less than expected, Key said.

‘‘It’s all circus, isn’t it. It’s a PR campaign, not a serious attempt to have a go at the bill but there was nothing new there.’’



The public submissions of Dotcom and the others would be taken into account, Key said, and changes would be made.



‘‘The bill will change. Bills always change, and we’re committed to getting the best legislation with the biggest majority we can.’’