If probe finds against Makhlouf then appointment here must be canned
Paschal Donohoe's appointment of Gabriel Makhlouf as Central Bank governor looks extremely fraught. If a probe in New Zealand finds he misled the government there, it's impossible to see how his appointment here can go ahead.
There's already a strong case that the minister should put the appointment on hold pending the outcome of the investigation in New Zealand into Mr Makhlouf's response to a budget leak.
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There's no suggestion Mr Makhlouf was aware of the leak in advance or party to it. And in relation to his response there's no allegation that he deliberately misled anyone about what had happened.
But it's a big mess, and Mr Makhlouf is in the middle of it just weeks after getting the job here, and that's a problem. We've learned from bitter experience the absolute importance of having cool and calming heads at the top of the Central Bank. With the stakes so high, it's not a job for someone who'll struggle in a crisis.
The New Zealand budget leak is small beer compared to what we've been through in the past decade or so.
On the face of it, Mr Makhlouf rushed to judgment last week - by blaming a cyber attack for the leak of the New Zealand budget of which his department was in charge. Mr Makhlouf almost immediately claimed the Treasury's IT systems had been "deliberately and systematically" hacked.
In reality, an enterprising researcher for the opposition National Party had used the search function on the department's own website to access files that should have been better hidden. There was no attack, none resulting in a data breach anyway.
Members of the National Party are understandably outraged at any implication that their political coup in pre-empting the budget was the result of a potentially criminal attack on state infrastructure. The original leak is the subject of a review, but more worrying for Mr Donohoe, Mr Makhlouf's handling of the situation is the subject of a separate investigation. It will look in particular at whether Mr Makhlouf's response misled the government. The facts certainly appear not to line up.
Even if the response was misleading, it need not have been deliberate. Mr Makhlouf may well have been relying on the information available in a developing situation. But that intervention, as well as being wrong, escalated rather than calmed the controversy surrounding the leak.
That's a real worry. The quality of advice the Central Bank governor gives the Government must be excellent, coolly assessed, evidence-based and clear. It also needs to be communicated with real care.
If the New Zealand probe finds Mr Makhlouf misled the government there it is impossible to see how he can be accepted here. Even as things stand, he's going to arrive into an extraordinarily sensitive role under a cloud.