NZ Treasury boss rebuked over budget leak

By on 30/06/2019 | Updated on 24/09/2020
Outgoing treasury secretary, New Zealand, Gabriel Makhlouf

New Zealand’s outgoing Treasury Secretary, Gabriel Makhlouf, was “clumsy” in his handling of a suspected data breach but acted in good faith, a government investigation has found.

State services commissioner Peter Hughes announced the findings on Makhlouf’s final day in post as chief executive and secretary to the Treasury. He is leaving for a new role heading up the Irish Central Bank, with a September starting date.

When details of New Zealand’s ‘wellbeing’ budget were leaked by the opposition National Party two days before its official release, Makhlouf alleged that there had been “deliberate” and “systematic” hacking of the Treasury’s website by people attempting to access confidential budget material. He referred the matter to the police; but it soon transpired that no hacking had taken place, and the material had been accessed simply by using the website’s search function. 

Good faith, bad call

“In my view [the situation] was not managed well by Mr Makhlouf,” said Hughes. “It was a clumsy response to a serious issue and is not what I expect of an experienced chief executive.”

The investigation, carried out by deputy state services commissioner John Ombler, looked into the public statements made by Makhlouf about the routes of access to budget material; the advice he provided to his minister at the time; his basis for making those statements and providing that advice; and the decision to refer the matter to the police.

Makhlouf was found to have acted in good faith, reasonably and without political bias, both in referring the matter to the police and in the advice he gave to the minister. However, Ombler concluded that he did not act reasonably in his public use of the phrase “deliberately and systematically hacked”, or further statements “continuing to focus on the conduct of those searching the Treasury website rather than the Treasury failure to keep Budget material confidential.”

Searchers not hackers

Hughes said he was disappointed by Makhlouf’s response to the incident. “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,” he said.

“As the investigation found, Mr Makhlouf focused more on the actions of the searchers of the Treasury website rather than his own personal responsibility as Chief Executive for the failure of the Treasury systems.”

According to Bloomberg, Makhlouf released a statement on Thursday night apologising for the fact that “budget information was not kept secure,” but saying he was pleased with the findings.

“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.”

Ireland awaits

There was speculation during the inquiry that Makhlouf’s position with the Irish Central Bank was in jeopardy, but following the report’s release, Irish finance minister Paschal Donohoe confirmed he would become governor as planned.

Donohoe told RTÉ News he had “considered the report in its entirety”, and noted it “makes reference to his integrity, his political neutrality and his desire to act in good faith at all times.”

“Mr Makhlouf has had a thirty year record of public service all over the world, and during that thirty years he has had an unblemished record and has performed and led very large organisations and dealt with very different policy matters, from New Zealand to the OECD to the UK,” Mr Donohoe said.

“He has been an exemplary public servant. I of course wish that the incident that has now been the cause of this report had not happened.”

About Natalie Leal

Natalie is a freelance journalist whose work has been published by The Sun Online, The Guardian, Novara Media, Positive News, and Welfare Weekly, among others. She also writes reports and case studies on global business trends for behavioural insights agency, Canvas8. Prior to working as a journalist Natalie worked for the public sector in social services for several years. She switched careers in 2013 after winning a fully funded NCTJ in a national writing competition. She holds a Masters degree in social anthropology from Sussex University where she specialised in processes of social change and international conflict and reconciliation processes.

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