Ireland

Central Bank directors expressed fears over Makhlouf controversy, papers show

Managers were concerned the bank would be hurt by new governor’s ‘hacking’ row

Gabriel Makhlouf’s appointment as governor of the Central Bank was approved by the Government in May and he took up the €286,760 post at the start of September. Photograph: Vivek Prakash/Bloomberg via Getty Images
Gabriel Makhlouf’s appointment as governor of the Central Bank was approved by the Government in May and he took up the €286,760 post at the start of September. Photograph: Vivek Prakash/Bloomberg via Getty Images
Fiach Kelly Deputy Political Editor
Sat Sept 28 2019 - 03:00

Central Bank directors were concerned about the "reputational damage" caused by controversy surrounding their new governor.

Internal documents show non-executive directors of the Central Bank Commission, which oversees the management of the bank, held a special meeting to discuss a New Zealand controversy involving Gabriel Makhlouf.

Mr Makhlouf’s appointment was approved by the Government in May and he took up the €286,760 post at the start of September.

He was chief executive and secretary of the New Zealand treasury since 2011 and also served as a senior civil servant in the UK.

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It emerged this summer Mr Makhlouf claimed the accidental leak of sensitive budgetary material in New Zealand was a result of a hack. However, a police inquiry found no evidence of a hack, and it appears the information had been published on the treasury department’s website.

Informal meeting

John Fitzgerald sent a note in July to his fellow Central Bank non-executive directors seeking an informal meeting before a full meeting of the commission, which includes full-time officials such as the governor and deputy governor.

His note, released to The Irish Times under the Freedom of Information Act, says: "In the light of events in New Zealand there are four issues I want to raise." These were Mr Makhlouf's contract, with Mr FitzGerald suggesting it would be "useful" to have legal counsel present to "close this off rapidly"; an "impending statement" from Mr Makhlouf and "the reputational damage done to the Central Bank of Ireland by events in New Zealand". His fourth issue was largely redacted .

Des Geraghty, another non-executive director, previously emailed Mr FitzGerald, saying: "I agree that the commission should give very careful consideration to what has emerged in NZ." Mr FitzGerald and Mr Geraghty declined to comment.

A spokeswoman for the Central Bank said: “As would be expected, members of the Central Bank Commission met to discuss preparations under way in the Central Bank for the new governor. This would be part of the normal expected business of a board in preparing for such an appointment.”