The Ministry for Primary Industries says it did not prosecute any big fishing companies for under-reporting hoki catch because court action doesn't help to change behaviour.
A 2011 report leaked to RNZ shows companies including Sanford and Talley's were under reporting hundreds of tonnes of the fish and making it vulnerable to being over fished.
Hoki earned the country $230 million last year and was famously used in McDonald's filet-o-fish burgers.
Operation Bronto, that led to the 2011 report, was significant and took a year to complete, MPI's head of compliance Gary Orr said.
"We had fisheries officers on naval vessels at sea undertaking boarding and inspection, we had fisheries officers in port that were inspecting product that was landed."
What it found was under-reporting of the amount of hoki being caught, in one case an estimated 780 tonnes in a single season, and widespread deliberate targeting of the juvenile hoki that boats were supposed to avoid in order to allow fish stocks to replenish.
There was even a suspicion that undersized hoki were being ground up in onboard mealing machines in order to hide evidence of the amount of small fish being caught.
A report was written up along with 45 recommendations asking for further investigation of the offending and the placing of more ministry observers on boats.
"People have said why didn't you prosecute," Mr Orr said.
"Well we know from experience that prosecution will achieve behavioural change for maybe four or five years at best. But if you want to achieve sustained behavioural change over a fleet of vessels operating in a fishery, you need to have a different method."
Instead MPI spoke to the companies involved.
"We briefed quota holders and vessel captains and then we sat down with individual companies and said these are the behaviours we're seeing, these create a compliance risk, you need to change your behaviours, if you don't change those behaviours then you're going to attract greater attention from us."
Mr Orr said within a year he was assured the big companies had changed their ways and there was no longer a risk of hoki being over-fished.
And he said ongoing audits of the industry reassured him that fishers had not returned to their old habits, although there has been no followup of the size of Operation Bronto.
Forest and Bird's Geoff Keey said the decision not to prosecute was a cop out.
"The fisheries managers who manage the fishery on behalf of New Zealand were saying there was no evidence of discarding while at the same time the compliance division of the same agency was uncovering significant offending."
He said the report cast doubt on the Marine Stewardship Council's decision to certify the hoki fishery as being sustainable.
Sanford chief executive Volker Kuntzsch said the offending named in the report was ancient history and not something his boats engaged in now.
"How unfortunate it is that we are digging something up that is seven years old instead of focusing on what the big issues are in our marine space these days. I've been putting a lot of effort in to turning Sanford's reputation into one where people feel we can actually trust this company."
Minister of Fisheries Stuart Nash said he was encouraging MPI to be more transparent and to publish reports such as this online.