Tuesday 17 September 2019

Failure: Good leaders own up to mistakes and Makhlouf didn't do that


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

Donal O'Donovan

Paschal Donohoe backed his man yesterday, definitively weighing in behind Gabriel Makhlouf to become Central Bank governor in September despite a pretty damning report from the incoming regulator's current boss.

Mr Makhlouf's mishandling of New Zealand's budget scandal was "not a sackable offence" but it fell short of the standards expected of an experienced CEO, the head of the country's public-sector watchdog said yesterday.

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Not good enough for New Zealand but good enough for us, apparently.

New Zealand's State Services Commissioner Peter Hughes stopped short of a issuing a formal reprimand - it would have been a cynical exercise given the enquiry reported on what was already Mr Makhlouf's last day in office, he reckoned.

But his disquiet was clear - at how Mr Makhlouf had rushed to judgment after details of the New Zealand budget were leaked, and then made wild public claims about a cyber-attack that turned out to be unsupported by any evidence.

It could hardly have been a worse last day for Makhlouf as New Zealand's treasury secretary, casting a shadow over his eight years in the role and ensuring he arrives from the Antipodes trailing his very own long white cloud.

The findings surely made grim reading for Donohoe, though not so grim that he'll halt Makhlouf's appointment as Central Bank governor here.

That was already a risky appointment. Makhlouf is an experienced public-sector manager but he has no background in either central banking or Irish policy.

Donohoe opted to brazen it out, betting the New Zealand budget leak fiasco was a one-off, rather than re-open the lengthy and expensive (the head hunters have already bagged their €70,000 fee) appointment process.

It's a big call, Donohoe has now effectively tied his reputation to Makhlouf - any fresh slip-up once the new governor is in situ should be career ending for the minister. Because it is not just his future he is placing in Makhlouf's hands - it's all of ours.

Just over a decade ago the top tier at the Central Bank was found absolutely wanting when the crisis struck.

If there is one thing the country needs it's a Central Bank chief who is good in a crisis - a calm communicator, a cool-headed and evidence-led decision-maker.

Its not just an Irish risk. At the ECB in Frankfurt Makhlouf will be part of the relatively tiny cohort charged with picking a route out of stagnation for the entire euro area.

If character is revealed in crisis, the relatively minor crisis of the leaking of New Zealand's budget revealed Makhlouf as wanting. That may be unfair. Donohoe says he's looking at Makhlouf's 30-year career rather than the evidence of a single week in May. No one can work for 30 years and not make a mistake, it's how we react once that happens that defines success and failure in leadership.

Unfortunately, only another crisis is likely to reveal whether the minister has made the right call.

And in New Zealand, Peter Hughes was clear about what he thinks senior leaders should do when things go wrong on their watch. "They need to own it, fix it and learn from it. And I expect people to stand up and be accountable, and I am disappointed that Mr Makhlouf did not do that on this occasion.

"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."

Most of the time most of us are only ever dimly aware of the name of the Central Bank governor, until something dreadful happens. Before the crash, a capable governor could pass an entire term without ever achieving public profile. The incoming chief has managed to go from complete unknown to a figure of notable controversy before he's even taken up the job.

Irish Independent

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