New Zealanders have a right to be disappointed with the system failure that allowed the appointment of Stephen Wilce to a senior Defence Force job, Prime Minister John Key says.
A court of inquiry was ordered after it was revealed Mr Wilce had made exaggerated comments about his background, including that he had a distinguished combat career and was a member of an Olympic bobsleigh team.
He was head of the Defence Technology Agency, which advises the military on technological and scientific matters, from 2005 until his resignation last month.
The court of inquiry's report was released yesterday and the head of the Defence Force, Lieutenant General Jerry Mateparae, said "dumb decisions" were made when he was hired.
Mr Key, travelling to Vietnam for the East Asia Summit, told reporters although Mr Wilce was given security clearance it was unlikely he had any information that amounted to a security risk.
"I think New Zealanders are right to be disappointed that the system failed to protect them," he said.
"At the end of the day that shows you that there's a failing in the system and all we can do is learn from that ... pick up the pieces and improve it."
Mr Key said there was no reason to apologise to overseas security agencies.
"We'll obviously review that in due course and see whether there's any reason, but at this point I wouldn't have thought so," he said.
Lt. Gen. Mateparae said it had been a severe embarrassment to the Defence force to have an individual present himself in a way that undermined and attacked its values.
The court of inquiry found the appointment process was "flawed in a number of significant respects" and the decision to grant Mr Wilce high-level security clearance fell short because of inadequate screening.