Child Youth and Family faces having to make a payout to a man it wrongly accused for 15 years of being a sex offender.
Photo: RNZ / Alexander Robertson
The agency had been repeating the information since 2001 and did not correct its reports to the Family Court until last year, despite being told three times it was wrong.
CYF has apologised to the man, but he has complained to the Privacy Commissioner, who backed his complaint and referred it to the Director of Human Rights Proceedings.
The man complained to the commissioner that because of CYF's statements, family members - including his son - and other members of his community believed he was a sex offender.
He had been assaulted and his house attacked as a result, he said.
CYF was now in talks with the man's lawyer over a settlement.
CYF deputy chief executive Murray Edridge said the agency accepted the information about the man's offending was incorrect and it failed to correct it quickly enough.
The information had now been corrected, including at the Family Court, Mr Edridge said.
"We have worked honestly and openly with the Office of the Privacy Commissioner to help resolve this complaint.
"We acknowledge the harm that has been done to this man and CYF is actively engaged with his legal representative to reach an acceptable settlement."
In a separate case, the government has called for a review of a CYF case where the agency told a court a father had a history of violence, when he did not.