Sunday 18 August 2019

Incoming Central Bank governor tells Paschal Donohoe he accepts New Zealand inquiry into budget leak

Gabriel Makhlouf will take up his role as Central Bank governor on September 1 under a cloud of controversy. Photo: Vivek Prakash/Bloomberg
Gabriel Makhlouf will take up his role as Central Bank governor on September 1 under a cloud of controversy. Photo: Vivek Prakash/Bloomberg
Hugh O'Connell

Hugh O'Connell

The incoming governor of the Central Bank has told Finance Minister Paschal Donohoe that he fully accepts the findings of an inquiry into the accidental leaking of sensitive budget information during his time as New Zealand treasury secretary.

As he prepares to take up the role of Central Bank governor in Dublin next month, Gabriel Makhlouf has been embroiled in controversy in New Zealand over the accidental leaking of sensitive budget information earlier this year.

The Department of Finance has this afternoon released a letter that Mr Makhlouf wrote to Mr Donohoe three weeks ago saying that he accepts the findings of the inquiry “in full”.

The former British civil servant initially claimed his department had been "deliberately and systematically" hacked following the budget leak in New Zealand in May. However, it later emerged the information was mistakenly made public on his treasury department's website two days before the budget was announced.

A subsequent inquiry by New Zealand's civil service watchdog found Mr Makhlouf acted "unreasonably" by seeking to blame those who accessed the information rather than try establish how it had been made available online.

Mr Makhlouf apologised for his role in the controversy but said the inquiry showed he acted in good faith and with political neutrality. He quoted these findings from the inquiry in his letter to Mr Donohoe on July 15, which the Department of Finance has published today.

Mr Makhlouf added in the letter that he had reflected on the conclusions of the inquiry and that he agrees with them “in full”.

He wrote to the minister: “In hindsight, I accept that I could have described the incident more clearly and with a different emphasis. I was pleased that my honesty, integrity, and political neutrality are not in question.

“I am a dedicated and committed public servant and am looking forward to starting my role as Governor and having the honour of serving the Irish people, woking with my team at the Central Bank.”

The Sunday Independent reported at the weekend that the outgoing European Central Bank governor Mario Draghi raised concerns about Mr Makhlouf's appointment with Mr Donohoe at a recent meeting of EU finance ministers in Brussels.

Mr Draghi’s intervention raised serious concerns in government as the ECB has no role in the appointment of governors by EU member states. An ECB spokesperson said it "does not get involved in the appointment of national governors".

The concerns around Mr Makhlouf's appointment centre on his civil service background and the fact he is not an economist. Mr Donohoe and Taoiseach Leo Varadkar have, however, staunchly defended their decision to appoint Mr Makhlouf.

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