The Chinese businessman whose citizenship was approved by former government minister Shane Jones came to New Zealand under "highly suspicious" circumstances, but there was not enough evidence to convict him of immigration fraud, a High Court judge says.

Justice Timothy Brewer released the reasons behind his decision to acquit the millionaire known as Bill Liu, who was accused of making false declarations on immigration papers when he came to New Zealand in 2001.

The court case revealed that Mr Jones, who was associate immigration minister in 2008, approved Mr Liu's citizenship despite his officials recommending it be declined because of questions about his past.

Mr Jones has been stood down from Labour's front bench while the Auditor-General investigates his decision.

Justice Brewer said the situation was "highly suspicious" that he had two passports in different names - Yan Yong Ming and Liu Yang - and did not disclose that to New Zealand officials.

Four of five immigration forms were filled out falsely, alleging he had no other identities.

However, the Crown had not presented enough evidence to prove that Mr Liu had acted with dishonest intent, Justice Brewer said.

Mr Jones maintains he followed the rules when he granted citizenship, saying he was told Mr Liu would be executed and his organs would be harvested if he returned to China.