Finlayson confirms Dotcom damages' liability

Attorney-General Chris Finlayson has confirmed the Government could be liable for damages related to Kim Dotcom's assets in New Zealand.

Mr Finlayson says the police gave an undertaking regarding costs, as required by the Criminal Proceeds Recovery Act.

He says the agreement on damages only applies to the $20.5 million frozen when the police arrested the Megaupload founder in January.

The Attorney-General says some of that money has subsequently been released and he thinks there is now only about $14 million covered by the undertaking.

Mr Finlayson says the assurance has nothing to do with the controversy over the Government spy agency unlawfully intercepting Mr Dotcom's communications.

The Government Communications Security Bureau is being investigated for unlawfully spying on Mr Dotcom and one of his co-accused, Bram van der Kolk.

Both men are New Zealand residents, and it's illegal for the agency to spy on people who live in the country.

Mr Dotcom is facing copyright, money laundering and fraud charges in the United States. He and three co-accused were arrested in Auckland in January and US authorities lodged papers seeking their extradition in March.

Next story in National: ACC considers levy cuts