Appointment of new Central Bank chief should be ‘paused’

The process of appointing new Central Bank governor Gabriel Makhlouf should be paused because of controversy engulfing him in his native New Zealand, Labour finance spokesman Joan Burton has said.

Mr Makhlouf claimed publicly that New Zealand's treasury systems had been hacked, despite advice to his department from the Government Cyber Security Bureau that no such hack occurred.

He is facing an inquiry during his final weeks as a senior official in New Zealand’s finance ministry and as head of treasury after he claimed budget details had been hacked and published by opposition politicians.

It later transpired that treasury had mistakenly published the information itself, which meant the opposition could access the data through a search engine without breaching any laws. The matter has been the subject of significant controversy in New Zealand.

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Minister for Finance Pascal Donohoe has approved the appointment of Mr Makhlouf as the head of the financial services regulator following the departure of Philip Lane. Mr Lane has been appointed chief economist of the European Central Bank.

Do we need to know?

Ms Burtoncalled on Mr Paschal to "explain what is happening".

“I’m sure the person who has been selected is absolutely excellent but the fact is this is a situation where it appears as though the head of the finance department in New Zealand is involved in a spat of some kind with the opposition. I do think it is something that the Minister needs to address.”

“I think certainly the minimum the Minister needs to do is pause the process. I can understand from the Minister’s point of view that is technically quite difficult because this is an appointment he himself would have personally . . . recommended to Cabinet . . . But he is going to have to find a mechanism to pause it until we know the outcome in full of the proceedings in New Zealand.”

In response, Mr Donohoe said: “The piece of legislation that governs that appointment opens up the option to government to make a change in the case of very, very grave misconduct. That is the legislative case and that is the law as it stands at the moment.

“I would like to make clear two points: I am not going to make any comment on a process that is under way in another country. Secondly, as I have already indicated, the new governor of the Central Bank has been appointed under law.”