The SIS knew a young woman was being sexually abused by her father but failed to lodge a complaint with the police, effectively allowing the abuse to continue for years, a former spy says.
The ex-SIS agent said he was involved in a covert operation in the late 1980s and early 1990s that involved entering a home where evidence of the abuse was found.
He took numerous photographs showing sexual abuse was occurring.
The former agent said he was rebuffed when he told his supervisor at the time that the SIS should involve the police.
It was the mid-1990s before the police talked to the victim and it wasn't until years later that the man was convicted for sex crimes, including rape, against his daughter.
The former agent said that ever since he had been "deeply troubled by the failure of the Service to protect the young woman".
SIS Minister Andrew Little said he was "extraordinarily disappointed that the moral framework under which various people would have been operating at the time meant they didn't refer it to the police".
"It's certainly a serious breach of a moral duty. If anybody was aware that there was an ongoing, serious criminal offence taking place, that ought to have been referred to the police."
Little said the SIS had changed its culture, oversight and information-sharing protocols with police since then.
But the former SIS agent, who cannot be identified for legal reasons, believed the spy agency threatened him when he tried to speak out about the issue this year.
He wrote to RNZ, saying that after listening to its spy podcast, The Service, in June, he felt concerned about the "legality and morality" of some tasks he had performed for the intelligence agency (he had completed more than 1000 covert operations for the police and SIS).
The former spy, who worked in a covert role for the SIS between 1986 and 1992, wrote one of those operations "involved very serious ethical and moral issues and a failure of the Service to ensure the protection and safety of a young woman".
He called on the Inspector-General of Intelligence and Security to use his powers as an independent watchdog to investigate.
After the former agent went to the Inspector-General, the SIS wrote to him warning about the consequences of releasing classified information.
In a letter to the former agent, which has been viewed by RNZ, SIS boss Rebecca Kitteridge said following "recent media commentary" about SIS activities between the 1950s and the 1990s she was writing to a "range of people" who had access to classified information.
She said the obligation to protect classified information was lifelong and failure to do so could have "serious implications" for the New Zealand government.
"We take any failure to comply with undertakings to protect classified information very seriously. This includes consideration of referral to New Zealand police for investigation of any criminal wrongdoing."
The former agent wrote back to her saying he assumed "recent media commentary" was a reference to the RNZ podcast The Service and accompanying news stories published in June. He said he "had nothing to do with the preparation or publication of the podcasts" and only knew about the stories when they were released.
He said he could only assume then that Kitteridge's letter related to his complaint to the Inspector-General.
He said he was "surprised and deeply offended" by the letter and would not be shut down.
"I interpret your letter to be intimidatory and threatening in nature, designed to encourage me to withdraw my complaint to the Inspector-General", he wrote.
But in a written response to questions from RNZ, Kitteridge said when she first became aware of the sexual abuse case in July she took immediate action, notifying the Inspector-General and commissioning two reviews.
"Regardless of the passage of time, the serious nature of the allegation concerned me. As soon as I became aware of the allegation I ensured that a thorough review was undertaken by the NZSIS."
She had also commissioned a review of current SIS policies "to ensure they are effective and give sufficient clarity to staff".
Little said he did not know the details of the offending but said the SIS would handle it differently today.
"My expectation is, if a service member, in carrying out their covert duties, came across criminal activity of that nature, my strong expectation is that that would be a matter that would be reported to the police."
Little said he was expecting a report on the issue soon from the Inspector-General.
He had spoken to Kitteridge about the issue after the intelligence agency briefed him about RNZ's reporting and investigation into the SIS.
"The way it was characterised to me was that it was conduct that ought properly to have been referred to the police."
The former agent does not reveal the name of the abuser - the man the SIS was investigating - in his letter.
It is unclear why the SIS was targeting the man and breaking into his home and why the spy agency did not lodge a complaint with the police if they knew the man was sexually abusing his daughter.
Little said it was his "very strong expectation" that the SIS would go to the police if they saw offending of this nature today.
"If service members come across serious criminal offending, and that is ongoing, they have an obligation to notify the police and every process is in place to allow them to do that."
SIS boss Rebecca Kitteridge said under the Intelligence and Security Act 2017 the SIS now had the ability to share information and intelligence with other agencies such as the police.
RNZ asked Little whether any material it was reporting would prejudice national security and he said it would not.
"I can't see anything that you've said to me is in breach of national security. I can't think that anything I've said would compromise national security."