Published:   27 June 2019

State Services Commissioner Peter Hughes has today announced the findings of an investigation into questions raised concerning the Chief Executive and Secretary to the Treasury, Gabriel Makhlouf, and his actions and public statements about the causes of access to Budget-sensitive material.  

The investigation has established the facts and made findings in relation to Mr Makhlouf’s public statements about the causes of access to the 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.

The investigation was conducted by Deputy State Services Commissioner, Mr John Ombler QSO, who found:

  • Mr Makhlouf acted in good faith, reasonably and without political bias in relation to the advice he gave the Minister of Finance
  • Mr Makhlouf’s decision to refer the matter to Police was made in good faith, was reasonable and showed no evidence of political influence
  • Mr Makhlouf did not act reasonably in relation to:
    • his use of the phrase “deliberate and systematically hacked” in his media statement issued at 8:02pm on Tuesday 28 May
    • his use of the bolt analogy in media interviews on the morning of Wednesday, 29 May
    • in his media statement on the morning of Thursday, 30 May, continuing to focus on the conduct of those searching the Treasury website rather than the Treasury failure to keep Budget material confidential.
  • In relation to Mr Makhlouf’s other written and oral media statements, Mr Ombler found Mr Makhlouf acted in good faith, reasonably and in a politically neutral manner.

The Commissioner said he accepts Mr Ombler’s investigation report and all his findings, which were reviewed by former Solicitor-General Mr Michael Heron QC.

Mr Hughes said his expectations of chief executives when things go wrong is very clear: they need to own it, fix it and learn from it. And stand up and be accountable. He was disappointed Mr Makhlouf’s actions on this occasion fell short of those expectations given the fact there was a breach of the Treasury’s information security, which was his responsibility.  

“The breach of security around the Budget documents should never have happened, under any circumstances,” said Mr Hughes.

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.

“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.”

The investigation found Mr Makhlouf’s decision to refer the matter to the Police was in good faith, reasonable and was not politically influenced. But Mr Hughes said Mr Makhlouf should have sought more advice before issuing a media statement about the referral.

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

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

The Commissioner said the investigation report is very clear that there are no grounds to support allegations that Mr Makhlouf’s public statements or actions were politically biased.

Mr Hughes said it was not for him, or Mr Ombler, to make a judgement on the adequacy of the Treasury’s information security to protect Budget-sensitive documents. That is the subject of a separate inquiry.

Ends

Media queries: Grahame Armstrong 021 940 457 or grahame.armstrong@ssc.govt.nz

 

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