GCSB staff who signed off on hosting a foreign agency's intelligence system should face disciplinary action, former prime minister Helen Clark says.
The existence of the system was revealed in a report released on Thursday by the Inspector-General of Intelligence and Security.
An investigation found the GCSB knew when it agreed to host the signals intelligence system - which intercepts and decodes messages from other nations' militaries - that it could be used to support "military operations by foreign partners".
However, the agency did not tell government ministers about the agreement, despite knowing how sensitive it was.
The system operated from 2013 until 2020.
Clark, who was the minister in charge of the GCSB from June 2003 until November 2008, told Checkpoint the revelation was "extremely serious".
"One would have thought that following on from the Inspector-General's report there should be some disciplinary action, if indeed people are still in the system."
It was likely to be an American agency that owned the signals intelligence system, she said.
While the United States was a Five Eyes ally, that did not mean the agreement should be kept secret, she said.
"The GCSB, operating at this more junior level, obviously couldn't be sure that what it was doing was in accordance with the government's intelligence requirements and with New Zealand law.
"You can be led along to think that something's OK, whereas actually, it needs a New Zealand lens put across it - and obviously, that didn't happen in this case."
The memorandum of understanding on hosting the system was signed at "a point of flux" for the GCSB, which, in effect, had acting leaders from late 2010 until early 2012.
"All checks and balances seem to have broken down at the GCSB," Clark told Checkpoint.
"Things fell through the cracks on this and who knows what else."
Earlier, Prime Minister Christopher Luxon told media he could not and would not comment on intelligence matters.
However, the hosting of the signals intelligence system was a "historical issue" and the GCSB had learnt a valuable lesson from the debacle, he said.
The agreement was legal at the time it was signed, but would not be possible today under strengthened legislation, he said.