A couple targeted by detectives hunting the 1080 milk-powder blackmailer claim National MP Nick Smith - while Minister of Conservation - personally attempted to dissuade them from suing the police.

Rolf and Ute Kleine have been paid $10,000 by police to settle a lawsuit over the time they spent as key suspects in the hunt for the blackmailer.

They were caught up in the inquiry after police focused on anti-1080 protesters as the source of the threat to put the poisonous pesticide into milk powder.

For months, the Kleines were targeted by an undercover police officer, had their home secretly searched and were eventually put through hours of questioning by detectives.

Documents show police were so convinced that one senior detective swore on oath: "I believe Rolf Kleine is the author of the threatening letters that were sent to Fonterra and Federated Farmers on 26 November 2014."

Instead, police solved the case by following DNA left on a threat letter to Jeremy Kerr, an illegal drug manufacturer also selling a competing pesticide that 1080 was pushing out of business.

After Kerr's conviction, Smith visited the Kleines at their Golden Bay home in mid-2016 with flowers and a card.

The card was personally signed by Smith and read: "I'm sorry you both got caught up in the awful incident involving the threat to poison baby-milk formula. You were completely innocent, and although I do not agree with your views on 1080, you are totally entitled to hold these and express them freely.

"I understand how upsetting the police investigation was for you both and are just so pleased they found and successfully charged the offender.

"There are no easy answers to the dilemma of innocent people being investigated with such crimes, but hope you are able to get on with your lives."

Former Conservation Minister Nick Smith told the Kleines how "sorry" he was they were caught up in the police inquiry.

Rolf Kleine said: "He told us the police had to do it and they did everything right. He said we wouldn't get far at court."

Ute Kleine said Smith told them "we wouldn't have a chance".

Smith said the visit was made out of compassion for the situation the couple had been in and not to dissuade them from suing police.

"I gave them no more than the advice that if they were taking legal action against the police that they needed to get good legal advice.

"I did say to them, I had constituents who had been through similar circumstances who had spent a large amount of their private money for no good benefit and that's what they needed to do going forward.

"It would be a misrepresentation of my visit to them to present it as trying to persuade them not to take legal action.

"I said just make sure you've got good legal advice before you go further. I have no recollection advising them against taking action."

Smith said it was reasonable for police to investigate those with "strong views against 1080".

He said 1080 opposition had seen cars and helicopters tampered with and threats made, including a death threat against himself by someone with a firearms licence which resulted in police providing security.

"The reason I called in on their cafe was to simply express as a minister at the time that I was saddened they had been put through what they had.

"They were complete innocents, they had strong views that I don't agree with in respect of 1080, and the reason I dropped the flowers off to them was the way in which they had faced the intrusion into their lives when there was no question of their innocence."

The visit came within days of a local newspaper story which said the couple had filed papers to sue police over their investigation.

The Kleines said they believed Smith was trying to dissuade them from pursuing police through the courts.

The couple, who moved to New Zealand from Germany about a decade ago, were drawn into the police inquiry early as police scrambled for leads.

Dubbed Operation Concord, police were trying to find the person or people threatening to poison milk powder and - in doing so - jeopardising New Zealand's dairy export market.

The threat was made in November 2014 and kept secret until March 2015 when then-Prime Minister Sir John Key made a formal announcement.

The 1080 poison is used to control possums and other pest threatening native plants and wildlife.

In that time, the country's national security apparatus saw a range of agencies working together to protect the country from the repercussions of the threat - and to keep the threat from being made public.

The threat was kept secret in line with a plan devised by the Department of Prime Minister and Cabinet's powerful "O-Desk" committee - the Officials' committee for Domestic and External Security Co-ordination.

Only weeks after the threat was made, court documents show the Kleines were of such interest they were targeted by an undercover police officer called "Eddie".

Rolf Kleine said "Eddie" visited the cafe the couple run in Takaka on a number of occasions and steered the conversation towards 1080.

"Eddie" told Rolf Kleine he was aware there were local activists who met to protest 1080.

"He said he knew the meetings are here in the shop. He'd like to be part of it, saying 'I'm strongly against 1080'. We talked a bit about the issue but I was quite busy."

The Kleines struggled to manage the intense interest of "Eddie" in 1080 while coping with the summer flood of tourists attracted to Takaka between December and April.

"He kept going until he, we would say in Germany, goes on to your nerves," said Rolf Kleine.

Ute Kleine recalls her husband rolling his eyes as "Eddie" repeatedly returned to the cafe. "Rolf would say, 'that guy is here again'."

A review of Operation Concord obtained through the Official Information Act shows that by early January police had properly analysed the 1080 sample sent with the blackmail threat.

The review showed the chemical was "analytical grade" of 99.9 per cent purity and "indicated the source was unlikely to be bait pellets and more likely to be a laboratory or another uncontrolled source".

The "analytical" 1080 sample made it highly likely the poison came from someone who worked in laboratory poisons - as Kerr did - yet police remained focused on the Kleines.

Detectives were granted a secret warrant from the district court granting officers permission to search of the Kleines' car, business and home and to do so without telling the Kleines for 12 months.

Court documents show the warrant was granted at least partly on the basis of submissions Rolf Kleine had made over 1080 issues and letters he had written to news organisations.

Court documents show that police waited until mid-morning on January 28, 2015, while the couple were at work, to break into their home and search for evidence they were involved in the blackmail threat.

While inside their home, officers searched for DNA evidence - even though no DNA had been recovered at that stage - and took hair from two hairbrushes, four pieces of used dental floss and swabs from toothbrush heads.

They also took a sheet of A4 paper with a print test carried out and two plain sheets of A4 paper.

While in the Kleines' home, police also cloned their two laptop computers, a USB stick and an external hard drive.

Key made the blackmail threat public on March 10, 2016, and police were quick to return to Takaka.

"Eddie" had been back a few days already, voicing anti-1080 views and working to ingratiate himself with the Kleines.

When he voiced approval over the 1080 blackmail threat, now public, the couple wanted distance.

"We instantly thought, what a bad advertisement for the anti-1080 lobby. We were instantly sure it could only be done by someone crazy."

With the threat public, police came to Takaka with questions for the Kleines. While they asked and then jotted down answers, Rolf Kleine remembered then volunteered a letter he had sent to Fonterra in 2012 "about the 1080 risk to dairy farms".

He printed the letter out and gave it to police. "The letter referred to the possibility that someone might deliberately contaminate overseas milk products with 1080," according to court documents.

The court documents also revealed it was the first police saw of the letter - it had not been handed over by Fonterra.

Kleine said he had written it after a 1080 drop saw poison pellets land on a dairy farm and he raised the possibility with Fonterra as a genuine concern.

Police sought a new search warrant, including the claim the letter raised the contamination of milk powder.

Court papers claimed Kleine's letter did not raise milk powder. Instead, it raised the possibility of a risk to milk products through cows drinking contaminated water.

The new police search warrant application also failed to mention its own expert advice that the threat letters from the blackmailer contained specific and technical terms meaning he was likely to be an "industry insider".

The legal suit against police also referred to evidence that the police's own linguistic expert had "discounted the likelihood" of the blackmail threat letters having come from a non-native English speaker.

There was also a police intelligence analyst who found that Kleine's language and phrasing in his emails to Fonterra "doesn't resemble the [threat] letter" and "my opinion is that he is not the same author" although did say he should not be disregarded as a "possible suspect".

Despite this, police returned two weeks with the new warrant in a dawn raid which saw the couple taken away for questioning.

Ute Kleine was held for four hours while Rolf Kleine was driven to the Motueka police station 90 minutes away and questioned until early afternoon.

"No food, apart from a sausage, had been offered to [vegetarian] Kleine," said the couple's lawsuit.

When they got home that evening, they found doors to the house open, dirt through the house, rubbish tipped from the kitchen bin on the bench top, insulation pulled from the ventilation system and the exhaust for the ventilation pulled from the wall.

"The actions of the [police] have caused great distress to the plaintiffs who are law-abiding and were previously trusting of police."

The couple also told the court their telephone and internet had experienced communications problems since the search warrants.

Jeremy Kerr, convicted over devising and orchestrating the 1080 threat against infant formula.

The arrest of Kerr left the Kleines feeling unfairly targeted - particularly after 12 months had passed and police were obliged to reveal their home had been secretly searched.

The discovery led to hiring lawyer Steven Zindel, who filed a lawsuit with the Nelson District Court seeking $165,000 in damages.

When they spoke to the NZ Herald, the couple talked of the challenge of having sufficient available funding to take the case all the way.

In June, they accepted a $10,000 settlement from police.

Assistant Commissioner Richard Chambers said there were "a wide range of individuals and motives" considered.

It led to 2600 people considered by the inquiry and 60 people marked as of interest.

"Any connection with the anti-1080 movement was an obvious line of inquiry given the threat letters demanded the Government end the use of 1080."

Chambers said it was normal for "persons of interest to be eliminated from an inquiry" as it progressed and "that is what occurred with this couple".

"We have consistently stated that we would not discuss reasons why specific individuals became of interest to the investigation, and that position still stands."

He said police would also not discuss "specific investigative techniques".

Chambers said police had previously apologised to the couple for any distress around the "lawfully obtained search warrant".

"The settlement of recent civil litigation by this couple also includes an expression of regret by police that they were drawn into the investigation, and a contribution towards their legal costs.

"However there is no admission of liability in the settlement, and no damages have been paid."

Kerr - who was also convicted for illegal drug manufacturing - was imprisoned for 8 1/2 years after his DNA on a blackmail letter led police to his struggling poisoning business which was failing to make headway against the pervasive use of 1080 for pest control.