A State Services Commission inquiry into Gabriel Makhlouf’s response to a leak of Budget data found him lacking on a number of fronts. So why, Sam Sachdeva asks, has he escaped formal sanction?

“When things go wrong, I don’t want ducking, diving, running for cover, spinning. I want people to stand up, own it, fix it, learn from it and be accountable.”

Peter Hughes’ words for his chief executives couldn’t be clearer, or more apt – so why don’t the State Services Commissioner’s actions regarding Gabriel Makhlouf match that ethos?

The SSC report into Makhlouf’s actions during the Budget “hack” saga pulled few punches.

While John Ombler cleared him of acting in bad faith or a politically biased manner, the conclusion that he was wrong to claim the Treasury had been “deliberately and systematically hacked”, and in focusing so heavily on the actions of those who obtained the information rather than his own department’s security failures, will sting.

Ombler also picked holes in Makhlouf’s analogy to RNZ of a locked room where the bolt was repeatedly hacked until it broke – a 4.30am bolt from the blue, it turns out, as he prepared for media interviews the morning after the Budget leak was revealed – saying it implied a degree of force that was far from the case.

A political conspiracy against National? No, but a sizeable cock-up and one that may have been avoided, Ombler noted, if Makhlouf had simply talked to the GCSB to get their view before putting out his media release.

Exactly what drove his decision-making is far from clear: was it righteous anger at those who had ruined his farewell Budget, or a panicked attempt to protect himself in the waning weeks of his time at Treasury?

Whatever the thought process, Makhlouf erred badly in turning what would have been an embarrassing but likely short-lived story into a more drawn-out drama by failing to take proper responsibility.

While the SSC report is clear, it is the response to those findings where it feels like Hughes has fallen short.

With Makhlouf heading off to greener pastures at Ireland’s central bank – Thursday was his last day at the Treasury, and potentially in New Zealand – Hughes essentially put his hands up and said he was powerless to impose any penalties upon his errant employee.

Crown Law and the former Solicitor-General Mike Heron both advised Makhlouf’s actions did not reach the threshold for a sacking, while Hughes claimed that placing a formal warning on his file would be “meaningless and cynical”.

“We can’t run the public service on the basis that you’re only as good as your last mistake. We can’t do that – that’s The Apprentice, it’s not Fair Go New Zealand,” he told media.

But those watching this particular political episode may wonder why Makhlouf did not end up as one of The Walking Dead.

Hughes is not wrong that the biggest penalty Makhlouf could face is to his professional and personal reputation, something that has now been well and truly dragged through the mud.

A formal reprimand may have been symbolic in nature, given he already had one foot out the door, but it seems just as cynical to deliver a tongue lashing for inappropriate behaviour yet stop short of doing anything tangible to register that impropriety.

Does failing to register an official caution now set a precedent for any SSC employees who find themselves in a similar situation?

Of course, Hughes is not wrong that the biggest penalty Makhlouf could face is to his professional and personal reputation, something that has now been well and truly dragged through the mud.

It is unclear what the damning findings will mean for Makhlouf’s new job: before the SSC report was released, Ireland’s Finance Minister Paschal Donohoe said his government could reverse the appointment in the case of “very, very grave misconduct”.

Hughes pointedly stopped short of describing the Treasury boss’s actions as misconduct, but the overall tenor of both his words and the report itself would seem to sit uneasily with Donohoe’s other comments that the Irish central bank needed “utter integrity and utter independence”.

Pressure on Robertson a little misplaced

As for the other players in this affair, National is still trying to further implicate Finance Minister Grant Robertson, with deputy leader Paula Bennett saying the buck stopped with him.

But in truth, Bennett and her colleagues have at points conflated Makhlouf’s misdemeanours with Robertson’s perceived wrongdoing.

New finance spokesman Paul Goldsmith accused Robertson of blaming the National Party for the hack “even when he knew that wasn’t the case”.

But in fact, it was National whose searches had uncovered the Budget figures and caught the Treasury’s eye, and the Finance Minister’s use of the word “hack” – the action which seems to have particularly enraged the Opposition – came as a result of the advice he received from Makhlouf.

Bennett and Goldsmith are right that ministers do have what is termed “vicarious responsibility” for their organisations’ actions, but demanding his head on a platter seems a bridge too far.

Makhlouf never offered his head, despite Hughes implying he should have done so, and his belated response to the SSC report did not offer much in the way of contrition.

“I am pleased that my honesty and integrity are not in question.”

The million-euro question for Makhlouf is whether his new employers feel the same way.

Sam Sachdeva is Newsroom's national affairs editor, covering foreign affairs and trade, housing, and other issues of national significance.

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