John Armstrong's opinion: Gabriel Makhlouf's refusal to resign over 'Budget hack' saga sets a truly awful example

June 28, 2019

But the investigation into the data breach found the then Treasury secretary acted in good faith.

So just where exactly does the buck now stop in the separate, but interconnected worlds of politics and the public service?

If your regard for accountability is as similarly bankrupt as seems to have been the case with Gabriel Makhlouf, the now (thankfully) former boss of the Treasury, then the answer is that the buck never stops at your door.

Makhlouf’s refusal to tender his resignation in the wake of the so-called "Budget hack" saga has set a truly awful example.

The failure of State Services Commissioner Peter Hughes to sack Makhlouf — the logical consequence of Makhlouf’s refusal to fall on his sword — is no less unacceptable.

The findings of the investigation that Hughes was obliged to set in train in the wake of the mayhem created by Makhlouf’s inept handling of the fall-out from National’s speculative raid on the Treasury’s website begs an awkward, but hugely important question.

If Makhlouf’s neck was permitted to escape the guillotine after the havoc he wreaked, just how woeful do things have to get before the State Services Commissioner, current or future, is willing to fire a chief executive who similarly appears to be oblivious to him or her being accountable when things go seriously awry in their bailiwick.

It goes without saying that one would have expected better from a public servant of Makhlouf’s calibre and experience. And not only that. The citizenry had every right to demand better from someone who was on the public payroll to the tune of $670,000 a year or thereabouts.

The State Services Commission launched an investigation into the outgoing Treasury secretary on June 4.

Hughes cited legal advice which argued Makhlouf’s length of service as precluding his dismissal.

That may be an accurate interpretation of employment law. The relationship between the State Services Commissioner and the departmental chief executives appointed by that office may technically be that of employer to employee.

To use that arrangement as an excuse for doing nothing is both pathetic and gutless.

The likelihood of the next governor of Ireland’s central bank — Makhlouf’s new job —mounting a legal challenge to his sacking are virtually nil.

Gabriel Makhlouf is under fire after complaining to police over a claimed hack of information from its website, something that has a much simpler explanation.

To be fair, Makhlouf’s bungling and blundering that was his response to breach of Treasury’s security — and which netted a priceless bounty of Budget-sensitive material for National — was a rare gaffe on his part. But it was a spectacular one. It has overshadowed everything else that he did during his eight years at the Treasury’s helm —and will forever do so.

It is only a guess — but not a wild one —that Makhlouf panicked. It is extremely rare for content of the Budget to be leaked or to otherwise seep into the public domain ahead of the document being delivered by the Minister of Finance in Parliament. But the possibility of such occurring can never be completely ruled out.

It is thus the stuff of nightmares for the head of the Treasury.

It is thus understandable that Makhlouf panicked. His behaviour and actions in the wake of National’s trumpeting of its possession of supposedly confidential material was inexcusable, however.

The security breach not only embarrassed Makhlouf’s political master. His referring of the "hack" to the police ended up placing Grant Robertson just one step removed from accusing National of illegality. National still claimed Robertson had "smeared" the Opposition.

National protested too much. It would have liked nothing better than to be accused of criminality. Given the swift decision of the police not to investigate the matter and the fact that National was poised to reveal that its staff had been the ones who had gained access to Budget documentation, Robertson would have been laughing stock in the very week when the Finance Minister gets the chance to strut the political stage to the max.

As it was, National managed to shift much of the the media spotlight away from Robertson’s showcasing of his first Wellbeing Budget.

Makhlouf’s intemperate language and his use of the word "hack" also appears to have caused much angst in the Government Communications Communications Security Bureau.

His statements veered close to suggesting that New Zealand was in the midst of a cyber attack.

The investigation conducted by the Deputy State Services Commissioner John Ombler at Hughes’ behest was good news for Makhlouf in finding he had acted in good faith and in a politically neutral manner. The bad news was that Makhlouf was seen to be more fixated with tracking down the perpetrators of the unauthorised accessing of the Treasury’s website than accepting responsibility for the failure of his department to keep sensitive information secure.

Hughes’ response to Ombler’s findings was to double down on the latter finding. He stressed the right thing for Makhlouf to have done was to have taken personal responsibility for the breach of the Treasury’s security and to do so publicly.

That is pretty damning. Hughes might have added something else that Makhlouf should have done. Once the Budget had been delivered in Parliament —if not beforehand—Makhlouf’s letter of resignation should have landed on Hughes’ desk forthwith.

There are no less than three separate reasons why it was incumbent on Makhlouf to step down.

First, Budget confidentially is sacrosanct. Budgets may no longer be filled with petrol price rises, hikes in alcohol and cigarette duties or other sensitive items, the knowledge of which confers an unfair advantage to those in the know if that detail is let out of the bag prior to the actual delivery of the Budget. But the principle of Budget secrecy remains firmly fixed in place. Any breach of that secrecy demands a resignation or resignations.

Second, Makhlouf was obliged to take the rap for such a serious breach of Treasury’s security. Its defences against cyber threats were hopelessly inadequate.

Third, his handling of the "unauthorised access" to the Treasury’s website was inadequate and mismanaged. In short, it amounted to an exercise in butt-covering rather than accountability.

Ombler’s investigation and Hughes’ response to his deputy’s report produced by his deputy confirmed all of the above.

One thing had changed, however. And that was absolutely crucial. By the time Ombler’s report was made public, Makhlouf was in his last day at the at the Treasury. The horse was a just a few short hours away from bolting for new pastures.

He could turn a deaf ear to Hughes’ explicit invitation to resign. Makhlouf’s parting gesture was to instead issue a brief statement in which he belatedly apologised "that Budget information was not kept secure".

That offering was very carefully worded. It might have been an apology. It was not an acceptance of responsibility.

Faced with Makhlouf’s refusal to be accountable for the mess, Hughes should have fired him. Failing that, Hughes should have formally reprimanded Makhlouf.

The State Services Commissioner acknowledged the inherent symbolism of such a reprimand.

His decision not to issue one is just plain wrong.

Makhlouf is Dublin-bound. He has left the Treasury. It is not known when he will leave the country. When he does go, the big pity will be that his most unfortunate and shoddy legacy will not be departing alongside him.

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