I've written before that the U.S.-initiated case against Kim Dotcom, the chief of Megaupload, the once-giant online storage company prosecuted over its customers' alleged copyright violations, is unraveling in New Zealand through a combination of police mis-steps and American high-handedness. In fact, Kim Dotcom has become something of a folk hero in kiwi-land, perhaps at least partially because he's so freaking weird, and rather disarmingly endearing about it. How can a case that has already become farcical spiral yet further down the rabbit-hole? What if it turns out that the local equivalent of the National Security Agency illegally involved itself, requiring a personal mea culpa on the part of the prime minister?

I shit you not. Remember, this is a case that started with a supposedly misbehaving Internet company and concerns over intellectual property. You know, music files, movie files … Megaupload managed to attract a seemingly obsessive amount of U.S. Justice Department attention, and the friendly folks in New Zealand stepped up to do their Yank law-enforcement friends a solid. Yeah. It might be a long time before they do that again. Here's an excerpt from a New Zealand government press release:

Prime Minister John Key today announced he has requested an inquiry by the Inspector-General of Intelligence and Security into the circumstances of unlawful interception of communications of certain individuals by the Government Communications Security Bureau. Mr Key says the Crown has filed a memorandum in the High Court in the Megaupload case advising the Court and affected parties that the GCSB had acted unlawfully while assisting the Police to locate certain individuals subject to arrest warrants issued in the case. The Bureau had acquired communications in some instances without statutory authority.

The GCSB is a signals-intelligence agency with, mostly, a foreign-intelligence mandate. As the New Zealand Herald puts it:

The law that governs the GCSB allows it to intercept the communications of foreigners without a warrant in some circumstances—but it cannot intercept New Zealand citizens or residents' communications even when it has a warrant and both Dotcom and his co-accused Bram van der Kolk … were New Zealand residents.

Let me repeat: This is an intelligence service that reports directly to the prime minister, and it involved itself, in defiance of the law, in a pissant intellectual property case.

I don't know who Kim Dotcom pissed off, and normally I'd advise him to pay them off and be done with it. But he looks to be doing just fine by sitting back and letting his enemies destroy themselves. Dotcom is, of course, having great fun with this development.