On January 20 last year, Kim Dotcom and three other executives were arrested by New Zealand Police, acting on a request by a US Federal Prosecutor. The four were charged by the US for racketeering and money laundering; and the Justice Department called Megaupload an “international organised criminal enterprise allegedly responsible for massive worldwide online piracy”. In addition, the US seized its domain name; and Hong Kong Customs froze more than 300 million Hong Kong dollars in assets. New Zealand Police already seized NZ$10 million from bank accounts and NZ$6 million in assets.
All four deny the charges.
Police had arrested him at a time when Dotcom was planning his reportedly-extravagant birthday party. Footage released in August reveals what happened – four armed members of the elite Special Tactics team enter the house early in the morning via helicopter. While they eventually found Kim Dotcom in the house, after barricading himself inside the “red room” in his house, it took them 13 minutes to find him.
It later emerged that the Special Tactics team was called in because the FBI believed that he had a “Doomsday” device that would wipe out any evidence of internet piracy. However, police say that it never existed.
Dotcom remained behind bars, after two attempts of bail were refused after crown prosecutors said that he was a “flight risk” and while they frozen most assets, they are not entirely sure they have frozen all of them. However, Dotcom finally was granted bail in late February when Judge Nevin Dawson was satisfied that all assets was frozen.
Megaupload’s closure and their founder’s arrest led to drastic changes to many other file sharing services – many, like FileSonic (which is one of the top 10 file sharing sites online with a quarter of a billion pageviews per month), only allowed users to upload and download their files. Others closed their affiliate programs, deleted accounts and files, or even shut down the entire service.
Kim Dotcom’s residency status in New Zealand became the subject of some controversy. He was granted residency status under its “Investor Plus” category after investing $10 million in government bonds for more than 3 years. The Immigration Department also said that they knew of his former criminal convictions, but waived the “good character requirements”, according to the New Zealand Herald, as the convictions were more than 16 years old, wanted to buy the most expensive home in the country that no one wanted, and would contribute to New Zealand through investment, consumption and philanthropy.
He has previously given $50,000 to the Christchurch mayoral fund following their earthquake, another $50,000 to a rugby player after an on-field injury left him in a wheelchair, and spent $600,000 to have a fireworks display in Auckland harbour.
Documents, however, showed that Dotcom set a deadline to approve his application by November 1, threatening officials that he would move to Australia or Canada if they didn’t. Documents also showed the deliberations of the processing his application, with one official writing that his investments “outweigh the negative aspects flowing from the applicant’s convictions.”
However, the department was looking to keep this hidden in order to “avoid further media speculation or attention” due to his desire to avoid such attention, but also due to the department predicting such bad press about the decision to grant him residency.
The Election Donation
The National-led coalition was rocked by a political scandal in late April when Dotcom alleged that John Banks, the Small Business Minister and also leader of the minor ACT Party, accepted a NZ$50,000 donation to his campaign to be mayor of Auckland back in 2010. He told TV3’s Campbell Live that he asked Dotcom to split the donations into two NZ$25,000 donations. Banks is also said to have received anonymous donations by Sky City Casino.
Under New Zealand law, it is illegal to classify donations over NZ$1,000 as anonymous if the candidate knows who the donor is – and Dotcom says that they both knew each other. Dotcom also told TV3 that he flew Banks to his mansion on his helicopter.
Banks, on the other hand, says while he knows Dotcom, he does not recall any conversation about donating money to his electoral campaign. On TVNZ’s Q+A programme, he said that he “signed my declaration for the mayoralty… in good faith in the knowledge as a Justice of the Peace as true and correct.”
“I have nothing to fear and nothing to hide and I welcome the inquiry and everything will come out in the wash,” he said.
In late July, the police has cleared Banks from any wrongdoing, despite the fact that police found that he personally solicited the donations, and in one case, received a physical cheque. However, according to Police Assistant Commissioner Malcolm Burgess, there was insufficient evidence that Banks knowingly sent in a false electoral return.