There are also concerns that unlawful fishing in NZ waters is threatening the world`s rarest dolphin.
Campaigners have called on McDonald`s to drop New Zealand fish from menus.
A study published earlier this week highlighted the long term problems of illegal fishing in New Zealand waters, concluding that the amount of fish taken from the seas was 2.7 times greater than the numbers reported.
Operation Achilles
The study referred to data contained in internal memos, written by officials at the Ministry of Primary Industries.
One of these documents, which is termed Operation Achilles, has now been published in full online.
It paints a picture of a fishing industry that routinely discards full nets of fish back into the sea, even when government cameras are present.
In the document, an official writes that "we have never had such compelling evidence to prove what we have known for a long time".
The inspectors are concerned that footage recorded on several trawlers would leak to the media. They speculate that revealing the true scale of the illegal practices could cause extensive damage not just for the New Zealand fishing industry but for the economy as a whole.
"A worst case scenario could see a large international company eg. McDonald`s, refusing to buy our non-green image fish," the report says.
Hoki cokey?
Up to 15% of McDonald`s fish products in recent years were made from hoki, but the company told the BBC that they currently source 8% of their fish from New Zealand hoki.
Hoki fishing has been certified as sustainable by the Marine Stewardship Council (MSC) several times over the past 15 years. Since 2011, McDonald`s has also carried the MSC sustainability label on its fish products in Europe.
But there have long been concerns about the sustainable nature of hoki fishing in New Zealand.
British retailer Waitrose once refused to stock the fish because of the bottom-trawling method used to catch the species.
In the recent report on illegal fishing in New Zealand, researchers point to hoki as one of the most dumped and under-reported species between 1990 and 2013.
"During the hoki season crew dumped every tow, two times a day. Even though the fish that had been caught were of good quality, we dumped them because the captain wanted to replace them with fresher fish," according to one crew member interviewed by the scientists.
As well as the illegal practices, the government memo draws attention to the impact of fishing on Maui`s and Hector`s dolphins, widely regarded as the most endangered dolphin species.
About 50 of these small marine mammals are known to survive. In 2012, two of them were caught in a fishing net, although only one was reported to the authorities.
In the leaked document, New Zealand fishing officials are clearly worried about the repercussions of such activities: "The deliberate non-reporting of Hector`s dolphins... could have a similar if not more dramatic flow on negative effect."
No cover-up
A New Zealand government spokesperson told it had announced a review of the contents of the leaked document and therefore could not comment further at the present time.
But reacting to the leaked documents, the New Zealand minister in charge of fishing, Nathan Guy, denied that the government was helping to cover up unsustainable practices.
"There`s been no cover-up here," he told reporters in New Zealand. "These are internal, draft investigations, part of which has been unfortunately leaked."
A spokesman for McDonald`s told that they placed their faith in the Marine Stewardship Council, who had asserted the New Zealand fish was sustainable.
"We understand the importance of protecting marine wildlife, especially endangered species that share the ocean with the fish we use on our menu," the company said in a statement.
"That`s why we`re proud of our global commitment to only source fish from a Marine Stewardship Council (MSC) certified sustainable fishery, including in New Zealand.
"The New Zealand hoki fishery is considered one of the most well maintained and controlled fisheries in the world and was one of the first fisheries in the world to be awarded MSC certification for sustainable fishing."
But campaigners are not happy and are now calling on McDonald`s to drop New Zealand fish from the menu and are asking people not to eat McDonald`s fillet-of-fish.
"People can vote with their wallets and send a strong message to the New Zealand government and fishing industry," said Dr Barbara Maas, from Nabu International, which campaigns on behalf of the Maui`s and Hector`s dolphins.
"We are not attacking McDonald`s, they have a huge opportunity here to do the right thing and bring about some real change in the New Zealand fishing industry - they could say they saved the Maui`s dolphins, and how good would that be for their brand?"
