New Irish Central Bank governor rebuked over NZ budget leak

Makhlouf apologises that budget information was not kept secure. (Reuters pic)

WELLINGTON: Ireland’s incoming central bank governor Gabriel Makhlouf has been rebuked for failing to take responsibility for a breach of security around sensitive budget information in New Zealand.

New Zealand State Services Commissioner Peter Hughes on Thursday released the findings of an investigation into Makhlouf’s handling of the budget breach in his role as the nation’s Treasury Secretary.

Hughes said while Makhlouf’s actions fell well short of what he expected, they did not warrant dismissal and Makhlouf did not to offer his resignation. His term ends today and he is due to take up the Irish job in September.

“He’s given eight years of loyal and dedicated service as Treasury Secretary, I respect that,” Hughes told a news conference in Wellington.

“He’s made some mistakes here in my view, that’s disappointing. What’s most disappointing to me is that he’s not owning that. That’s his choice. That’s where we leave it.’’

The investigation was launched after New Zealand’s opposition National Party revealed details of budget spending days before the budget’s official release last month, prompting Makhlouf to claim Treasury’s systems had been “deliberately and systematically hacked” and call in the police.

Lawfully accessed

It later emerged that the National Party had accessed the information easily and lawfully through the search function on the Treasury’s website.

The National Party called for both Finance Minister Grant Robertson and Makhlouf to resign, saying they had wrongly accused it of criminally hacking budget information.

The investigation found that Makhlouf’s decision to refer the matter to police was made in good faith, was reasonable and showed no evidence of political influence. However, he did not act reasonably in relation to his use of the phrase “deliberately and systematically hacked,” the report said.

“The breach of security around the budget documents should never have happened, under any circumstances,” said Hughes, whose role includes employing public service chief executives and reviewing their performance.

“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.”

‘Village stocks’

Hughes said he has not spoken to Irish officials about the episode and Makhlouf disagrees with the investigation’s findings.

Irish Finance Minister Paschal Donohoe welcomed the finding that the incoming central bank governor had acted in good faith, in a politically neutral manner.

The incident must be seen in wider context of Makhlouf’s “long and distinguished public service record,” he said, in a statement in response to queries.

Hughes said it would be “meaningless and cynical’’ to issue formal reprimand on Makhlouf’s final day in the job, he said.

Pressed on why he was not taking any action, Hughes said: “What’s most important to him right now is his reputation, and my sitting here, saying the things I’m saying to you in an open media conference, is not going to do that very much good at all. Short of putting him in the village stocks, what else can I do?”

In a statement late on Thursday, Makhlouf said: “I apologise that budget information was not kept secure.”

“The report confirms I acted at all times in good faith and with political neutrality,” he said.

“It also confirms that I acted reasonably, other than in my descriptions of the incident. I am pleased that my honesty and integrity are not in question.”