At a distance of some decades, with the limited information available, I do not find myself in a position to reach a firm conclusion that the Service acted improperly by not informing the Police of what it learned in this instance. A Service officer proposed, with good reason, that the Police should be contacted. More senior staff in the Service were entitled to make a decision. The information was not passed on. I find that questionable, but in the absence of any recorded reasoning and considering all the circumstances I cannot be sure it lacked a proper foundation.Nowdays, the Public Records Act means public agencies have a positive obligation to create and maintain records, so if something like this had happened after 2005, the lack of records of a potentially significant decision would imply that it was never considered (or alternatively, that a crime had been committed). Back then, there was no such obligation, so the IGIS is giving them the benefit of the doubt. I'm not sure that they should. They note that this was a serious decision requiring serious consideration, and that at the time such consideration generated a paper trail. The absence of such a paper trail suggests strongly that there was no such consideration. And that is exactly the impropriety complained about.
The good news is that the SIS now has a police on when to pass information to the police, so there's a standard for them to be judged against (even if its one they wrote themselves, in secret). The IGIS will also be reviewing information sharing between the SIS, GCSB, and police. So maybe they'll be stopping this from happening in future.