Donohoe says he wishes incoming Central Bank governor incident ‘never happened’

Finance minister stands over appointment of Gabriel Makhlouf despite NZ inquiry finding

Gabriel Makhlouf. Imminent departure from New Zealand post made an official reprimand or other punitive action not practicable, his employer said. Photographer: Vivek Prakash/Bloomberg via Getty Images

Gabriel Makhlouf. Imminent departure from New Zealand post made an official reprimand or other punitive action not practicable, his employer said. Photographer: Vivek Prakash/Bloomberg via Getty Images

 

Minister for Finance Paschal Donohoe has said he wished an “incident” involving the man who is to become Central Bank governor had never happened.

Mr Donohoe said, however, that he stands by his decision to appoint Gabriel Makhlouf, after New Zealand’s public service watchdog found that he “acted unreasonably” in characterising as “hacking” a leak of parts of the 2019 budget from his department’s website.

The State Services Commission criticised Gabriel Makhlouf’s “clumsy” handling of budget leaks last month.

Mr Makhlouf initially said the leaks were the result of a deliberate hacking.

However it then emerged the details were accidentally published online.

“The process that led up to the appointment of Mr Makhlouf was my putting together a panel of independent figures who were involved in central banking and central bank policy,” Mr Donohoe said.

“I asked them to conduct a global search for a figure who would be best qualified to lead the Irish Central Bank as we approach another point of change.

“They recommended a single name to me, Mr Makhlouf, and I accepted that recommendation.

The New Zealand Taxpayers’ Union had a stark warning for the Irish public following the results of the inquiry criticising Mr Makhlouf.

“Irish taxpayers who read the transcript would be alarmed to know that this official is soon going to be in charge of their Reserve Bank,” said Jordan Williams, the group’s executive director.

But Mr Donohoe said Mr Makhlouf had a 30-year record in public service around the world. “During that 30 years he has had an unblemished record and has performed and led very large organisations and dealt with very difficult policy matters, from New Zealand, to the OECD, to the UK.

“He has been an exemplary public servant.

“I of course wish that the incident that has now been the subject of this report had not happened.”

Mr Donohoe said he has considered the report into the matter “in its entirety.”

“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 appointment has already been made by the Government and he will be taking up office now in September.”

‘Major hit’

Mr Makhlouf leaves his post as head of New Zealand’s treasury with a “major hit [to his] personal and professional reputation,” according to his employer, the State Services commissioner, Peter Hughes.

However, Mr Hughes said that according to legal advice the conduct did not constitute “a sackable offence.”

He said Mr Makhlouf’s imminent departure made an official reprimand or other punitive action not practicable.

Deputy commissioner of state services, John Ombler, who authored the review, said Mr Makhlouf responded to leaked budget data from treasury with insufficient consideration of his department’s deficiencies.

“I think that there was far too much emphasis on looking at the actions of the person who accessed the website, rather than the failure,” Mr Ombler said.

In the wake of the leak, it emerged that the treasury department had mistakenly made the information available itself through a public web search tool.