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Incoming Central Bank chief to take up role despite 'clumsy' handling of budget leak in New Zealand

Finance minister Paschal Donohoe said that he wished the incident with Gabriel Makhlouf had never happened.

The Central Bank of Ireland
The Central Bank of Ireland
Image: Sam Boal/Rollingnews.ie

Updated Jun 27th 2019, 3:30 PM

THE INCOMING GOVERNOR of the Central Bank of Ireland has been criticised for his “clumsy” handling of a security breach in New Zealand last month.

The State Services Commission (SSC), the country’s public service watchdog, found that Treasury Secretary Gabriel Makhlouf sought to blame others and poorly managed an incident which saw budget details accidentally posted on the department’s website.

Makhlouf will leave his job in Wellington this week before becoming the Governor of the Central Bank of Ireland in September. 

Speaking today, Minister for Finance Paschal Donohoe expressed confidence in the “integrity” and “political neutrality” of Makhlouf.

Donohoe said he wished that the “incident” had never happened, but confirmed that Makhlouf will take office in the coming months.

“Makhlouf has a 30-year record of public service all over the world and during that 30 years he has had an unblemished record,” he said. 

Makhlouf initially said the leaks happened as a result of deliberate hacking. However, it later emerged that the department was not the victim of a cyber-attack, but accidentally published budget details on its website, which could be accessed using a search function.

“I have concluded that Mr Makhlouf failed to take personal responsibility for the Treasury security failure and his subsequent handling of the situation fell well short of my expectations,” SSC chief Peter Hughes said.

“Mr Makhlouf is accountable for that and I’m calling it out.”

The SSC found that Makhlouf acted in good faith when he first described the leaks as a hack and said he showed no political bias against those who released the information.

But it said he was less forthcoming after receiving updated advice about the nature of the leaks and that he continued to suggest the problem was a hack, rather than admitting that it was a mistake by his department.

Hughes said it would be meaningless to punish Makhlouf when he was leaving for a new role, but added that the bureaucrat’s reputation had been damaged by the findings.

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Hughes said he was disappointed Makhlouf had declined to publicly apologise over the affair.

There was no immediate response from Makhlouf or the treasury department.

The Irish government announced Makhlouf’s appointment to the Central Bank last month, saying he was a candidate of international calibre with an extensive knowledge of financial markets and economic policy.

With reporting from AFP and Christina Finn. 

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