Reports that the American billionaire and Trump loyalist insider Peter Thiel is winding down his business interests in New Zealand call to mind one of the more controversial issues relating to New Zealand citizenship in recent years.

Peter Thiel is an entrepreneur and venture capitalist who co-founded PayPal in 1998 and the major data analysis company Palantir Technologies in 2003, amongst other global technology businesses. He has been a substantial contributor to the United States Republican Party over the years, supporting many right-wing causes, and was on the executive of Donald Trump’s transition team when he was first elected President in 2016.

In 2011, Thiel was granted New Zealand citizenship, despite having spent only 12 non-consecutive days in the country, compared to the normal residency requirement of 1,350 days. At that time, there were many wealthy Americans seeking to relocate in New Zealand as a bolthole and promising in return to invest substantially in the New Zealand economy.

Most of these applications were unsuccessful, but Thiel’s application was approved under the “exceptional circumstances” provisions of the Citizenship Act because it was considered to be in the “public interest”. Ministers argued he would be a “great ambassador and salesperson” for New Zealand.

But it was not until 2017 that Thiel’s New Zealand citizenship and the details surrounding it became known publicly. At that time, I was the Minister of Internal Affairs, responsible for citizenship matters. However, I had not taken up that role until 2014, three years after Thiel had become a citizen.

Nevertheless, because of the public controversy the revelation of the circumstances of Thiel’s citizenship caused, I carried out my own informal review of the case. Following a recommendation from the Ombudsman I agreed to release previously withheld official information about Thiel’s citizenship application. This showed that Thiel had actively lobbied Ministers to become a New Zealand citizen but had rarely been seen in New Zealand since being awarded citizenship.

Based on the information available to me at time, I concluded that were no reasonable grounds for granting Thiel citizenship. I told both Parliament and the media that had the original decision been mine to make I would not have approved the application.  At the same time, I acknowledged that I had no legal authority to overturn the decision, except in the most unusual of circumstances where Thiel had been proven by a Court to have acted deliberately against New Zealand’s interests or threatened our security. Neither of these were ever likely to happen, so Thiel remains a New Zealand citizenship to this day, even if his interest in this country appears to be diminishing.

In the wake of the Thiel affair, Internal Affairs officials proposed to me ways of making the citizenship process more transparent to “help address possible perceptions of undue influence and better ensure public confidence”. These included an "open citizenship register”; writing into law which factors could be used when considering "exceptional circumstances"; and even setting out a specific exception for activities such as vast financial investment.  Another option would be a periodic independent assessment of all these decisions, which are relatively rare, by the Auditor General.

I agreed with most of these proposals (although I preferred the Ombudsman instead of the Auditor General as the review authority) and directed they should all be considered as part of the wider review of citizenship law I had planned for 2018. However, I left my role as Minister in late 2017, and the review I had planned appears to have never taken place.

The government’s recent announcement of a new visa scheme to make it easier for foreign investors to come to New Zealand reopens many of the questions raised by the Thiel citizenship affair. While visa schemes making it easier for foreign investors to invest here and create jobs to grow the New Zealand economy should be welcomed, they must not be allowed to circumvent the rules by which New Zealand residents become citizens, in the flagrant way the Thiel case did.

Citizenship should always be granted only in accordance with the provisions of the Citizenship Act. Where there are exceptional circumstances requiring the exercise of the Minister’s discretion, these should be fully documented and be reviewable by the Ombudsman. Indeed, when I was Minister and made citizenship decisions either against the recommendation of officials, or exercising the exceptional circumstances discretion, I always set out my reasons in full in a memorandum attached to the case file.

Citizenship is a precious privilege accorded to those born here, qualifying New Zealand residents, and those with a special association with this country. The Thiel case is a salutary reminder that citizenship can never be allowed to become just one more commodity to be casually traded as part of a putative investment deal.