Prime Minister John Key is facing calls to sack former ACC minister Nick Smith after it emerged he wrote to ACC on ministerial letterhead supporting a claim by a former National Party figure.

The calls were made during a snap debate in Parliament and follow Smith being forced to apologise to Key after admitting to an error of judgement over the incident.

Labour MP Chris Hipkins said Smith should resign or be sacked for such a serious error of judgement.

Green MP Kevin Hague said Smith should at least be stood down while the matter was investigated.

"In 1999, deputy speaker Ian Revell resigned over the improper use of the deputy speaker's letterhead. If Nick Smith were the manager today, I would say he ought to be sacked. Right now he needs to be stood down while this matter is under investigation.

"He is not a junior minister, he is a senior experienced minister and this is an absolutely fundamental breach of the Cabinet manual and ministerial responsibility.

"This entire thing is a circus and requires a fully independent investigation."

NZ First leader Winston Peters said in Parliament that Smith should have been sacked immediately from Cabinet.

"It was a shabby little case, involving blackmail, sex, a minister with a conflict of interest and he should go now."

This morning the Government released the letter, written in support of former National Party figure Bronwyn Pullar.

Pullar was also at the centre of a massive privacy breach by the corporation, having been inadvertently emailed the names and details of thousands of ACC clients, including about 250 sensitive sexual abuse cases.

Earlier today, Key said Smith made an "error of judgement" sending the letter, but he had accepted his apology over the matter.

Key said he did not think Smith should lose his ministerial portfolios.

Labour leader David Shearer said earlier that it was "unwise" and "stupid" for the then-ACC minister to write the letter.



"That is a clear conflict of interest and Nick Smith has been around long enough to know what that is."



Shearer stopped short of calling for Smith's resignation, saying more details were needed first.



However, he said if Smith was a minister in his Cabinet he would have been stood down.



There needed to be a fully inquiry into the matter.



"The public need to know exactly what has gone on.



"I think there is a lot more to come out."

WHAT WAS IN THE LETTER

Read Nick Smith's letter here.

The letter was addressed "to whom it may concern". Smith was ACC minister at the time.

Smith insisted, however, that he had not used his ministerial position to influence ACC.

He said he now regretted writing the letter, saying it was an error of judgment.

Smith said Pullar was a friend but he would not describe her as a family friend or an intimate.



"I made the balance of judgements at the time that the right thing to do as a friend was not to interfere in ACC in any way but to provide the information of what I knew prior to her accident. In hindsight that was a mistake."

In the July 7, 2011 letter, he said Pullar was a long-standing friend since the mid-1990s through her voluntary work for the National Party, her South Island family and her work in the export industry.



While written on a ministerial letterhead, Smith says in it that it would be inappropriate for him to comment on her claims issue "given my current role as minister".



He was also not in a position to have a view on the degree she had recovered or been rehabilitated from the cycling accident a decade before.



"I can confirm however, that in my many contacts with Bronwyn prior to the accident she was well and a dynamic, capable person who worked hard and achieved a lot.

"To the best of my knowledge she did not have any health or other conditions or issues that would have compromised her capacity to work."



"She had a strong reputation as a very effective and efficient worker in both her voluntary and professional roles.



"I wish to put this on the record so to assist in any comparative assessment of Bronwyn's current health."



Smith said he had not offered to resign.



He said the letter made absolutely plain that he only wanted to provide information for the medical assessor about the claimant in the sense that he knew her prior to the accident, and that prior to that period he had no knowledge she had "any health issues or the like".



He had asked the claimant for the right to release the letter.



She had written dozens and dozens of emails to him seeking his intervention.



"I repeatedly said to her that the proper process for her to go through was the independent review process that ACC has."



She had come back to him to say ACC was claiming she was not employable or not in a fit state of health prior to the accident.

'ERROR OF JUDGEMENT'



Key said he had accepted Smith's apology and it was an error of judgement to send the letter on ministerial letterhead.

He had seen the correspondence between the minister and ACC and the reference letter Smith provided for Pullar's medical assessment.



Smith had made it clear she was a friend, Key said.



"I think in writing a reference, even though we all have friends, as Ministers of the Crown, that's an error of judgement in this particular case.



"I accept his assurance about the communications he's had with the management of ACC, that she was known to him, that she was a friend, that he didn't want any influence there."



The reference letter was about Pullar's state of health and was sent to the medical assessor, not ACC.



It did not seem to have had an influence because she was still unhappy with the level of support she received from ACC, Key said.



He believed Smith would act differently if presented with the same situation again.



"I wouldn't want to see him do that again."



Key had written letters of reference on his letterhead for former employees "very few" times.



He recalled meeting Pullar early in his political career but had not seen her in the past five or six years.



"I remember her telling me right back then about her accident, about how she was treated with ACC, so it's been a long-standing dispute and arguably changes of government have made absolutely no difference in terms of the way she perceives that that disputes been handled."

ACC DECISION-MAKING 'UNAFFECTED'



ACC Minister Judith Collins said she had not seen Smith's letter but did not believe it had influenced ACC's decision-making on Pullar's case.



"I would hope that nobody would be influenced in that light."



Pullar was entitled to dispute ACC's claim she had asked for two years of benefit payments in return for returning the confidential data. ACC had laid a complaint about her.



"If she believes she has been wrongly dealt with, there is going to a review by the Privacy Commissioner, I understand the police are involved and I'm sure she will be able to advise them accordingly."



Collins said she was "100 per cent confident" neither her nor her staff had leaked details about Pullar to the media.



She had forwarded a summary of Pullar's case, sent by former National Party president Michelle Boag, to ACC's chief executive Ralph Stewart and chairman John Judge.



"Where it has gone from there, I don't know. Who has leaked it, I don't know."



It could have been leaked from another source, she said.



"I am sure any electronic footprint on those emails will show exactly where it has gone."



ACC was working with Privacy Commissioner Marie Shroff to develop terms of reference for her independent investigation into the privacy breach.



"ACC will be co-operating fully with the Privacy Commissioner to come to a conclusion as to how it happened but also to put in place processes so it doesn't happen again.



"It is difficult to guarantee that but a process is clearly needed."

NAME LEAKED

Pullar's name was leaked to a Sunday newspaper, along with an email from Boag, who was also at the meeting in which ACC claims the threat was made.



The email was from Boag to Collins and detailed her recollection of the meeting.



Key said Collins has assured him she did not leak the email.



ACC confirmed last night it had given Collins an assurance the email was not leaked by either the chief executive or staff.



Boag yesterday insisted she had not leaked the email or Pullar's name to media.