The former minister for Child, Youth and Family says her department "funded" the abuse of young people at a boot camp on Great Barrier Island.
Ruth Dyson says officials had ignored 16 years of warnings about the programme, and did not believe teenagers who made complaints.
She made the comments as part of a SUNDAY investigation about the Whakapakari boot camp on Great Barrier Island.
It was set up in the late 1970s by former star wrestler John Da Silva, who had a vision to use Maori culture and the great outdoors to help troubled youth.
The camp was hosted on his family's land in the picturesque – and isolated – Mangati Bay on Great Barrier Island.
The camp began receiving Government funding, and the state contracted the Whakapakari Youth Trust to rehabilitate troubled teens from across the country.
In the late 1980s, young people began making serious allegations of violence against camp supervisors and other residents.
"It became a programme based on domination, on fear and on the use of violence," says lawyer Sonja Cooper, who has represented 79 former residents of the camp.
Complaints were made by young people until the camp closed in 2004.
Ruth Dyson was the minister at that time. She says she and previous ministers had no idea about the history of red flags.
"A lot of government money was spent on that programme," she notes.
"And in the end, it resulted in the state funding violence and abuse towards young people. That's how horrific it was."
John Da Silva QSM says he did not condone, or have any knowledge of, abuse at the camp.
His family says the abuse allegations "break their hearts", and they are working with the Crown to ensure every allegation is thoroughly investigated.
The Government has begun investigating complaints, and in some cases has apologised to, and compensated, former residents.
The survivors of Whakapakari want their stories to be heard – and the state held to account.
Watch Jehan Casinader's full story on SUNDAY, 7.30pm on TVNZ1.