More than 1300 work visas were issued to foreign students at a time when government agencies were aware of problems at the private school they attended, new figures show.
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A later investigation found the now-defunct school, the International Academy of New Zealand (IANZ), was passing students it should have failed.
The figures, released to the Labour Party under the Official Information Act, show 857 work visas were issued last year to IANZ's students, and 464 this year.
Labour's tertiary education spokesperson David Cunliffe said that was despite government agencies knowing about the rort.
The first complaint against IANZ was in 2014, but a formal investigation only began in April this year, he said.
"In that time, over 1300 work visas were granted on the basis of qualifications which look pretty dodgy in hindsight, based on testing that has been done on some cohorts."
RNZ reported yesterday that NZQA conducted a focused review of the private tertiary institution's assessments this year.
When NZQA looked at 77 examples of students' work that IANZ said met those standards, it found all of them should have been failed.
Some answers were unintelligible, and some work was not up to scratch even though IANZ tutors had described it as being of high quality.
There had been similar results form other cohorts, Mr Cunliffe said.
"One ... showed only 14 percent of those tested were able to pass a retest."
The system for picking up poor quality institutions was almost entirely reliant on whistleblowers, he said.
"There's no proactive monitoring, there's no spot-checking."
It was also clear the problem was getting worse.
"There are 13 live investigations into potential student visa fraud at the moment by Immigration New Zealand.
"The Tertiary Education Commission's got 19 private tertiary institutions classified as high risk [and] the Serious Fraud Office is investigating five."