Saturday 20 July 2019

Donohoe's Central Bank choice subject of NZ inquiry

Gabriel Makhlouf. Photo: Bloomberg
Gabriel Makhlouf. Photo: Bloomberg
Donal O'Donovan

Donal O'Donovan

New Zealand has launched a formal investigation into incoming Central Bank of Ireland governor Gabriel Makhlouf's handling of a high-profile budget leak.

If the New Zealand inquiry finds Mr Makhlouf did mislead the government there it would raise a major question mark over whether his appointment here can proceed.

It would also raise questions over Finance Minister Paschal Donohoe's decision to appoint the little-known outsider to one of the most sensitive posts in the State.

The New Zealand probe will include examining whether Mr Makhlouf misled its government about alleged hacking of the country's budget last week.

Mr Makhlouf has become embroiled in a major controversy in New Zealand, after parts of the budget his department was working on leaked, and he blamed a cyber attack that now seems not to have happened.

"The treasury has gathered sufficient evidence to indicate that its systems have been deliberately and systematically hacked," Mr Makhlouf said in a statement at the time.

It later emerged the budget information had in fact been available on the department website, and there had not been a hack.

Yesterday, New Zealand State Services Commissioner Peter Hughes, head of the body that oversees the country's civil service, confirmed he will look into whether Mr Makhlouf misled the government about how the budget information was accessed.

In the wake of the original leak, Mr Makhlouf called in the police to investigate, and issued a statement citing advice from the National Cyber Security Centre, an arm of the Government Communications Security Bureau.

In his statement, Mr Hughes said the investigation would look into recent questions raised concerning Mr Makhlouf "and his actions and public statements about the causes of the unauthorised access to budget material".

"The investigation will establish the facts in relation to Mr Makhlouf's public statements about the causes of the unauthorised access; the advice he provided to his minister at the time; his basis for making those statements and providing that advice; and the decision to refer the matter to the police.

"Mr Makhlouf believes that at all times he acted in good faith," Mr Hughes said.

"Nonetheless, he and I agree that it is in everyone's interests that the facts are established before he leaves his role on June 27, if possible. Mr Makhlouf is happy to co-operate fully to achieve that."

Here, officials said the Department of Finance was aware of the investigation but declined to comment.

Last month, Finance Minister Paschal Donohoe named Mr Makhlouf, currently head of the New Zealand treasury, to take over as Central Bank governor from Philip Lane, opting for him over senior local applicants including Central Bank deputy governor Sharon Donnery.

He's due to take up the €270,501-a-year job in September.

As Irish Central Bank governor, Mr Makhlouf will also have a seat on the ECB governing council.

Last night, Government sources here admitted the situation was problematic but said they were keen to wait for the outcome of the New Zealand probe.

At this stage, there is an expectation among Irish officials that Mr Makhlouf will not be found responsible for any wrong-doing.

A senior source at Merrion Street acknowledged the controversy is not ideal.

"It's not great given the negativity some people already have around the appointment of an outsider," the source said.

Extensive background checks were done before the appointment and there were "no skeletons", the source said.

Irish Independent

Also in Business