State Services Commissioner slams Gabriel Makhlouf's 'clumsy response' to Budget 'leak'

The State Services Commissioner Peter Hughes has concluded that Treasury secretary Gabriel Makhlouf's handling of the Budget 'hack' saga "fell well short" of his expectations. 

Peter Hughes said Makhlouf "did not act reasonably" in his use of the phrase "deliberate and systematically hacked" in his media statement on May 28, after Budget details were released early. 

Treasury eventually said it hadn't been hacked, not long before National leader Simon Bridges revealed a search tool on the Treasury website was used to uncover the Budget material - not a hack. 

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

He said the SSC's investigation into Makhlouf's actions found that he "focused more on the actions of the searchers of the Treasury website than his own personal responsibility as chief executive for the failure of the Treasury systems". 

Hughes added: "The breach of security around Budget documents should never have happened, under any circumstances."

The State Services Commissioner outlined where he felt Makhlouf acted responsibility - such as when he referred the matter to police - but he also noted when he felt Makhlouf hadn't acted responsibly. 

'Acted in good faith':

  • Makhlouf acted in good faith, reasonably and without political bias over the advice he gave the Minister of Finance Grant Robertson. 
  • Makhlouf's decision to refer the matter to the police was done in good faith, was reasonable and showed no political bias.

'Did not act reasonably':

  • Makhlouf's 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 who was searching the Treasury website rather than the Treasury's failure to keep Budget material confidential.

Hughes concluded: "The right thing to do was to take personal responsibility for the failure irrespective of the actions of others and to do so publicly. He did not do that.

"His subsequent handling of the situation fell well short of my expectations. Mr Makhlouf is accountable and I'm calling it out."

The Budget leak saga began when the National Party released Budget 2019 information two days before the full details were due to be released.

The Secretary to the Treasury claimed Treasury had "sufficient evidence that indicates the material is a result of a systemic hack and is now subject to a police investigation".

It prompted Finance Minister Grant Robertson to issue a statement echoing Makhlouf and mentioning the National Party by name. 

National accused the Government of deliberately misleading the country for more than 24 hours by allowing New Zealanders to think the Treasury had been hacked. 

It was also revealed the Government Communications Security Bureau (GCSB) said it did not think hacking had occurred. 

Gabriel Makhlouf is leaving his position on June 27,  to take up a role as head of the Irish Central Bank.