UPDATED: 8.20PM The Government's fuming after an embarrassing mistake with the sale of a Taranaki farm to a foreign company.

The Grozovsky brothers were approved to buy Onetai Station in 2013, despite the Overseas Investment Office knowing they'd been convicted in Argentina the year before, for a tannery they owned that was leaking chemicals into a river.

LISTEN ABOVE: Labour's finance spokesperson Grant Robertson talks to Rachel Smalley

Land Information Minister Louise Upston said she can't say much, as an investigation is underway.

"It's fair to say I'm not happy about the position we're currently in. What is important though is any time there is a serious allegation is that the office investigates it thoroughly."

However, Ms Upston did say they're considering all options.

"When there is an instance where there is a breach, one of the enforcement actions available to the Overseas Investment Office is to force the sale of the property."

Labour's finance spokesman Grant Robertson told Rachel Smalley the office seems to be relying on a statutory declaration stating they are of good character.

"They don't actually appear to have been even going as far as doing Google searches on who the people behind the purchases are and that's just incredibly slack when we're dealing with New Zealand's sensitive land."

New Zealand First leader Winston Peters said it's a major mistake, but not surprising.

"The Overseas Investment Office is just a rubber stamp. It's a disgrace actually, for a nation to have such a body in charge of any of its policing of the rules and the laws."

The Overseas Investment Office will consider legal action against the two brothers if they fail a good character test.

Land Information New Zealand's Chief Executive Peter Mersi said relevant information was not passed onto government ministers at the time.

He said he has now apologised to Land Information Minister Louise Upston for the slip up, and assured her it will not happen again.