Monday 19 August 2019

Taoiseach: Incoming Central Bank governor 'should make statement on criticism of his handling of budget leak'

Gabriel Makhlouf. Photo: Bloomberg
Gabriel Makhlouf. Photo: Bloomberg

Hugh O'Connell, Kevin Doyle and Donal O'Donovan

Taoiseach Leo Varadkar has said the incoming Central Bank governor should make a statement on the criticism of his handling of a recent budget leak.

An inquiry in New Zealand has found that the outgoing treasury secretary Gabriel Makhlouf failed to take responsibility for a leak of sensitive budget information.

Ahead of taking up his new role in Dublin this September, Mr Makhlouf is facing calls to accept he acted unreasonably by initially claiming the leak was a result of the New Zealand's treasury department's website being "deliberately and systematically hacked", when in fact the budget documents had been inadvertently posted online.

Speaking at the British-Irish Council in Manchester today, Mr Varadkar said it was important to bear in mind how Mr Makhlouf was appointed to the Central Bank's top job.

"There was an international competition, there was a set of interviews and he was the sole candidate put forward to cabinet and at that point we made his appointment and we’ve no plans to revoke his appointment," he said.

“The report that you have seen from New Zealand says that he acted in good faith and didn’t act in a political way at all, but it was critical of some aspects of how he handled that and I am sure he will want to make a statement on that before he takes up office and I think that it would be appropriate.”

The Taoiseach's comments come after Finance Minister Paschal Donohoe staked his personal reputation on the decision to proceed with the appointment of a new Central Bank governor who is embroiled in controversy.

An inquiry has found outgoing 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.

Police dismissed Mr Makhlouf's claim the website was "deliberately and systematically hacked", saying nothing illegal happened.

It was later revealed the New Zealand opposition National Party uncovered the budget details just by using the website's search function.

Investigators yesterday said Mr Makhlouf made a "clumsy response to a serious issue".

The investigation found he acted in good faith and without political bias, but his actions were not reasonable and he should have taken more personal responsibility.

New Zealand's State Services Commissioner Peter Hughes, who led the inquiry, said the security breach around budget documents should never have happened.

"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 [Mr Makhlouf] did not do that," he said.

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

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

But Mr Makhlouf remains on course to take up the post of Irish Central Bank governor in September.

Mr Donohoe said: "I wish that the incident that has now been the subject of this report had not happened.

"I have considered the report in its entirety and I have noted that in the report it makes note of his integrity, his political neutrality and his desire to act in good faith at all times."

The minister said Mr Makhlouf had an "unblemished" record up to this point and should still get the top job.

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

Asked whether it would hurt his own reputation if the new governor were to be at the centre of any controversy here, Mr Donohoe replied: "Of course, the responsibility does sit with me as Minister for Finance."

Former Central Bank deputy governor Stefan Gerlach warned yesterday in a posting on Twitter that the controversy "will unavoidably impair Mr Makhlouf and the Central Bank's credibility" .

Mr Donohoe said he retained confidence in Mr Makhlouf: "I am confident that when Mr Makhlouf moves into the role the qualities that have led to him having such a successful career in public service all over the world up to this incident happening will become apparent to stakeholders in our economy and to the country."

Labour's Joan Burton said Mr Donohoe would have to begin work "to reassure us all that the new governor of the Central Bank will conduct himself, and manage his office, in a fully transparent manner".

While she described the inquiry's findings as "worrying", Ms Burton stopped short of calling for Mr Makhlouf to be deselected.

Online Editors

Today's news headlines, directly to your inbox every morning.

Also in this section