New Zealand First leader Winston Peters wants an inquiry into how the founder of the company Megaupload obtained residency in New Zealand.
Kim Dotcom, 37, was arrested in Auckland with three colleagues on Friday. He is now at the centre of one of the world's biggest internet piracy prosecutions.
He was granted residency under an investor-plus category in 2010, despite a conviction in Germany for fraud.
Mr Peters told Morning Report that money has clouded the issue and he wants to know who is behind it all, including any politicians involved.
He said how Kim Dotcom could have satisfied the criteria of good character defies logic.
Mr Peters said the case is doing damage to New Zealand's international reputation.
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An immigration specialist says an inquiry should take place, to give the Department of Labour the chance to clear itself of any wrong-doing.
Association for Migration and Investment chairman Simon Laurent says an inquiry could be the only way to resolve the issue.
He says Mr Dotcom's application should be disclosed under the Official Information Act.