Prime Minister Bill English has known for more than a year that National MP Todd Barclay had secret recordings of staff conversations.
Mr English admitted yesterday he told police Mr Barclay himself told him about the recordings, believed to include former staffer Glenys Dickson who quit amid a bitter employment dispute.
The MP had again denied secretly recording staff and said he didn't tell Mr English he had.
Mr English's admission was quickly followed by Mr Barclay fronting the media to read from a brief statement.
"I have read Mr English's statement to the police and accept it," he said.
"I shouldn't have been as specific in my comments to the media today about the allegations.
"I am sorry if any of the answers I gave this morning were misleading in any way."
Mr Barclay refused to answer questions, walking away from reporters who were shouting "so you lied?"
Mr English's admission came just hours after he told reporters he couldn't recall who told him about recordings.
"I've gone back and checked that [police] statement that was given in March or April last year and in that statement I said to the police that Todd Barclay had told me that he had recordings of his staff criticising him," he said.
Just hours later, Mr English's office released a copy of the prime minister's statement to the police on April 27, 2016.
"I had a conversation with him (Mr Barclay) regarding Glenys Dickson leaving his office and he said to me that he had recordings of her criticising him," Mr English told police.
He confirmed it was a face-to-face conversation.
Mr English was then asked how Mr Barclay had made the recording.
"Yeah, he said he had just left the dictaphone on," Mr English said.
Mr English has long denied talking to anyone directly involved in the employment dispute, despite himself being the former Clutha-Southland MP with close relationships with all involved including Ms Dickson who worked in the office for nearly two decades.
Mr Barclay, a first-term MP who was in November re-selected as National's candidate for Clutha-Southland, again denied the claims yesterday morning.
"I've seen the allegations and I totally refute them," he said.
Asked if he told Mr English he had recorded staff he responded "no".
Mr English said it was "really a matter for [Mr Barclay]" to address the discrepancies in their statements and again stood by Mr Barclay's decision not to co-operate with the police investigation.
Mr Barclay initially told media he would fully co-operate with investigators but ultimately refused to give a statement based on advice from his lawyer.
"He made the choice to ... not to do anything. I can't override that," Mr English said.
Police did not press charges, dropping their investigation because of a lack of evidence after a 10-month investigation.
Assistant Commissioner Richard Chambers said there hadn't been enough evidence to obtain search warrants during the investigation which was now closed because there was "insufficient evidence to prosecute".
"If any new information is brought to the attention of police then that information will be assessed by the investigating officers as to its relevance to this case," he said.
The latest development in the more than two-year saga came after text messages from the then deputy prime minister to electorate chairman Stuart Davie talking about Mr Barclay leaving a dictaphone running in his office were released by Newsroom.
The messages also referred to a confidential payout made to Ms Dickson to avoid legal action over the potentially illegal activity, so large it had to be topped up by then prime minster John Key's leader's budget.
"He left a dictaphone running that picked up all the conversations in the office. Just the office end of phone conversations," the message reportedly said.
"Glenys settlement large to avoid potential legal action. Had to be part paid by prime ministers budget. Everyone unhappy."
Mr English said the terms of the settlement were confidential and he was not aware of the amount paid.
Labour leader Andrew Little said Mr Barclay and Mr English had to "front up" about what they know.
"It seems clear that there has been recording of a private conversation, that there has been a police investigation that looks like it has been stonewalled and obstructed," he said.
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