Tuesday 20 August 2019

Incoming Central Bank governor Gabriel Makhlouf criticised for 'clumsy' handling of budget leak in New Zealand

Gabriel Makhlouf. Photo: Bloomberg
Gabriel Makhlouf. Photo: Bloomberg
Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins

Praveen Menon

Ireland's incoming Central Bank governor has been criticised by an inquiry in New Zealand.

The inquiry found that as New Zealand treasury secretary Gabriel Makhlouf failed to take responsibility for the leak of sensitive budget information last month and fell short of expectations in how it was handled.

However, Finance Minister Paschal Donohoe this morning cautiously backed his Central Bank appointment, despite the findings of the inquiry.

A spokesperson for the Minister said: "Minister Donohoe notes that the findings of the independent State Services Commission report on the New Zealand budget leaks has been published.

"He welcomes the fact that Mr Makhlouf has been found to have acted at all times in good faith and in a politically neutral way.

"Mr Makhlouf has a long and distinguished record of public service over many years and this one incident must be seen in that wider context."

The inquiry's report comes as Mr Makhlouf prepares to take up his new job in Dublin after ending his tenure in New Zealand on Thursday.

The government ordered an investigation into the handling of the early access and leak of sensitive budget information from the treasury's website. Police dismissed Mr Makhlouf's claim that the website was "deliberately and systematically hacked", saying nothing illegal happened.

It was later revealed that the opposition National Party uncovered the budget details using the website's search function.

"The breach of security around the Budget documents should never have happened, under any circumstances," State Services Commissioner Peter Hughes said in the report.

"The right thing to do here was to take personal responsibility for the failure irrespective of the actions of others and to do so publicly. He did not do that," he said.

The investigation, however, concluded that Mr Makhlouf's decision to refer the matter to the police was made in good faith. There were also no grounds to support allegations that Mr Makhlouf's public statements or actions were politically biased, Hughes said.

"It was a clumsy response to a serious issue and is not what I expect of an experienced chief executive," he said.

Ireland appointed Mr Makhlouf on May 1, shortly before he was caught up in a national furore over the unauthorised access to budget information.

Makhlouf is due to take over as Ireland's central bank and also sit on the Governing Council of the European Central Bank on Sept. 1.

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Ireland must have a central bank of "utter integrity", Finance Minister Paschal Donohoe said earlier this month in response to the New Zealand controversy.

Labour Party TD Joan Burton had previously called for the appointment of Mr Makhlouf to be "stalled" as the enquiry took place.

Speaking in the Dáil earlier this month Ms Burton said the role of Central Bank governor was “one of the most important” jobs in Ireland.

“I think it’s not good enough that what we’re told has happened in New Zealand has simply not given rise to any commentary or explanation by the Minister for Finance.

“I’m sure the person who has been selected is absolutely excellent. But the fact is that this is a situation where it appears that the head of the finance department in New Zealand is in a spat with the opposition,” the Dublin West TD said.

Responding, Mr Donohoe indicated that under legislation Mr Makhlouf has already been appointed to the Central Bank.

He said this happened at the end of “a very rigorous” process.

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