Gerry Brownlee says 'spying' is the wrong term to describe what a private investigation firm did to Christchurch quake claimants.
Southern Response, set up by the Government after AMI collapsed under the weight of claims following the 2011 quakes, hired firm Thompson & Clark to infiltrate meetings of claimants considering legal action against the agency.
The release of the State Services Commissioner's report on the agency's use of Thompson & Clark saw chairman Ross Butler resign, and a complaint has been laid with police regarding potentially unlawful recordings of the meetings.
Mr Brownlee, who was Earthquake Recovery Minister at the time and had responsibility for Southern Response, told RadioLIVE on Friday the report was written "with the wisdom of hindsight" and Southern Response has done "a pretty good job".
"I certainly knew there were death threats, very serious death threats against staff, and there was also you know, some serious other threats about what would happen to their property, et cetera," he told hosts Mike Puru and Carly Flynn.
"Then there was regular and... very serious abusive situations that arose. I certainly knew that they were going to have a look at the security of those staff.
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"Now, exactly what the details of that were, I wasn't aware of that. But I do think the term 'spying' is probably the wrong one because of the atmosphere that was there, the situation that the Southern Response board, and indeed their chief executive, faced as employers, and I think care of duty for staff."
He said it would be disappointing if the law had been broken, but it was a "highly charged environment", and defended the performance of the outgoing chairman.
"I have huge disappointments for the chairman, who was a very fine chairman and changed his whole life, his business involvement et cetera to take the job in.
"Remember that AMI failed - the New Zealand-based insurance company, it failed. It couldn't meet its obligations. All of the claimants would have been well and truly out of pocket had the Government not stepped in to set up Southern Response as a run-out insurer. It cost the taxpayer about $1 billion. I think they've done a pretty good job."
Current Minister for Greater Christchurch Regeneration Megan Woods said she was disappointed in Southern Response's past actions.
"Covertly attending private claimant meetings and recording closed door conversations without anyone's knowledge are not appropriate ways for Government entities to manage their reputations.
"These actions were wrong, plain and simple. They are unacceptable to me and unacceptable to this Government."
An interim chairman will be appointed in the coming days.