Suggestion looms for new Central Bank man

Cantillon: Paschal Donohoe poised to question dual role occupied by Gabriel Makhlouf

Central Bank of Ireland:  its directors were concerned about the “reputational damage” caused by controversy surrounding their new governor.  Photograph: Alan Betson

Central Bank of Ireland: its directors were concerned about the “reputational damage” caused by controversy surrounding their new governor. Photograph: Alan Betson

 

Documents released by the Central Bank of Ireland and the Department of Finance suggest there could be some interesting times ahead between Gabriel Makhlouf and the commission, or board, that oversees the regulator.

Briefing notes prepared for the Minister for Finance Paschal Donohoe in advance of meeting Makhlouf (previously a high-ranking New Zealand official) during the summer included a section about the latter’s dual role as governor and chairman of the Central Bank Commission. It is suggested that Donohoe say the dual role is “complex and would not be permitted in any of the institutions that you regulate”.

A separation of these roles would suggest the appointment of a new chairman.

The briefing note also suggests the Minister add the following: “I am aware that you see the Central Bank Commission as a significant resource to the bank and that you intend to make greater use of them.

“I would be very supportive of this approach and I would encourage you to come forward with proposed changes to the role of the commission or potential wider changes to the governance of the bank.”

New Zealand controversy

Meanwhile, separate documents released by the Central Bank show that its directors were concerned about the “reputational damage” caused by controversy surrounding their new governor, in advance of him taking up his role on September 1st.

Internal records show non-executive directors of the commission held a special meeting to discuss a controversy in New Zealand earlier this year around the release of budget information, involving Makhlouf.

Makhlouf claimed the accidental leak of sensitive budgetary material in New Zealand was a result of a hack. However a police inquiry found no evidence of a hack and it appears the information had been published on the ministry’s website by mistake.

While the concerns expressed were natural enough given the bizarre circumstances of the controversy in New Zealand and the sensitive nature of the governor’s role, it might strain relations between Makhlouf and his new board. And encourage the Cairo-born executive to take up the Minister’s advice to institute change in the commission’s role.

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