VIQ's court recordings: onshore hosting didn't stop offshore access

On 4 November, Australia's Information Commissioner published a report on preliminary inquiries into VIQ Solutions, a transcription provider to Australian courts. The OAIC won't take further action, but its reasoning deserves a close read from anyone buying AI or software on the strength of a data residency promise. The recordings stayed on Australian servers, and staff of a subcontractor in India still reached them.

What the OAIC found

VIQ's Canadian parent inadvertently added employees of e24 Technologies, its contractor for global transcription, to workpools on VIQ Australia's NetScribe platform. Five e24 staff in India held access from September 2025 until it was revoked on 11 February 2026. Three of them used it, reaching audio snippets from 93 matters in the Federal Courts.

The OAIC called the incident materially smaller than media reports had suggested. A Senate estimates committee had heard a figure of almost 150 matters. The Federal Court was satisfied the files held no confidential information or suppressed material, and the courts assessed the risk of harm as low.

The Federal Court contract barred transfer of, or access to, personal information from outside Australia without permission, so VIQ breached its contracts. Privacy law produced a narrower result. The OAIC thought a breach of APP 8, Australia's cross-border disclosure rule, was unlikely because the audio stayed on Australian servers, couldn't be downloaded, and dropped out of reach once each task ended. VIQ's own statement says "Data never left Australia". The OAIC did see a reasonable basis for concern under APP 11, the security principle, because a company with no relationship to VIQ had reached the platform. Its report makes no concluded findings.

The comfort in those conclusions has limits. The OAIC didn't verify how far VIQ's policies were followed in practice, and VIQ's administrators said they didn't hold all the information requested. An independent review for one of the courts found the snippets ran five minutes, where VIQ had said 15, though the OAIC said the difference didn't change its conclusions. VIQ's Australian business stopped operating in July, and the OAIC cited that closure among its reasons for stopping.

Why a transcription case matters for AI buyers

The OAIC report doesn't mention AI, and it describes human transcribers, even though VIQ describes its platform as AI-driven. The failure still maps closely onto AI procurement. Vendor residency statements usually say where data is stored. The VIQ case turned on who could reach the data, and on how a parent company's contractor came to be on a local subsidiary's platform.

AI services add a further separation between storage and processing. AWS's March description of Bedrock in Auckland says data at rest stays in the source region, while requests under the Australian inference profile can run in Auckland, Sydney or Melbourne. Its global profile can send requests to supported commercial regions worldwide. A customer who reads only the first of those statements has an incomplete picture.

Human access is a separate question again. Microsoft's October sovereign cloud announcement includes EU partner oversight of remote access by its engineers, and that oversight is scoped to the EU and EFTA. The announcement doesn't offer an equivalent for New Zealand customers, so a New Zealand buyer needs to ask what controls apply to its own tenant.

What it means for NZ businesses

New Zealand's Privacy Act leaves a similar gap. The Privacy Commissioner's office says a provider holding information as your agent is treated as if you hold it yourself, and you generally stay responsible for what you put in the cloud. IPP 12 applies to an offshore provider if the provider uses the information for its own purposes. Our reading is that a remote access slip inside a vendor might never engage IPP 12, yet it could still land on you as the responsible agency. The Act gives you no ready-made limit on where vendor staff can log in from, so your contract has to set one. Ask your lawyer to test that reading against your own arrangements.

The report also carries a detail New Zealand suppliers shouldn't skip. Footnote 6 says matters were also accessed by e24 transcribers based in New Zealand, although the report concentrates on India and doesn't examine that access further. A clause like the Federal Court's would treat an Auckland support engineer the same way as one in Chennai. New Zealand IT providers and software teams with Australian customers should read their access clauses with that in mind.

The contract terms did useful work. The OAIC found they met the legal requirements and helped its inquiries, and it also noted that unauthorised access can still happen when procurement is done properly. A clause gives you a remedy after the event. Whether the remedy is worth anything depends on the vendor still existing, and the courts here faced delays gathering information while VIQ was failing.

For the most sensitive workloads, running models on a local AI server takes the AI vendor's staff out of the default path and keeps prompts inside your network. It doesn't remove the risk that sank VIQ's assurances, because VIQ's problem was an access list error. Your own administrators and support contractors can make the same mistake on hardware in your own comms room, so private deployments need the same access reviews as hosted ones.

Practical next steps

• List every AI and software vendor holding personal or commercially sensitive data, then record where each stores the data, where each processes it, and where human staff can reach it from.
• Ask each vendor in writing which entities outside the contracting company can get access, including parent companies, subprocessors and overseas support teams.
• Write access into your contracts alongside transfer, as the Federal Court's clause did, and require notice before any new subcontractor or location is added.
• Check that AI requests run where you expect. Confirm the inference profile or region setting in use, and record who approved it.
• Get evidence of controls. Ask for access logs you can hold yourself, and review the list of people with access on a set schedule.
• Add insolvency and exit terms covering retrieval of logs and data, plus confirmed deletion, so your evidence doesn't depend on a liquidator.
• If you supply Australian customers, compare your New Zealand staff and contractors against each customer's offshore clause, and get written permission where you need it.
• Update your privacy impact assessment. The Privacy Commissioner's office recommends doing one before you start and updating it regularly. Vendor access questions belong in your wider AI governance process so they're asked before a tool goes live.