Treasury boss officially under investigation over Budget hack comments

Derek Cheng, NZ Herald,
Publish Date
Tuesday, 4 June 2019, 5:08PM
Treasury Secretary Gabriel Makhlouf will be investigated by State Services Commission. (Photo / NZ Herald)
Treasury Secretary Gabriel Makhlouf will be investigated by State Services Commission. (Photo / NZ Herald)

State Services Commissioner Peter Hughes has officially confirmed he will look into whether Treasury Secretary Gabriel Makhlouf misled the Government about how confidential Budget 2019 information was accessed.

This follows strong rhetoric from Prime Minister Jacinda Ardern this afternoon, when she said it was something she expected Hughes to look into.

That was stronger rhetoric than this morning, when Ardern had merely suggested that the State Services Commission could consider such matters.

Hughes said in a statement that the investigation will look into recent questions raised concerning Makhlouf, "and his actions and public statements about the causes of the unauthorised access to Budget material".

"The investigation will establish the facts in relation to Mr Makhlouf's public statements about the causes of the unauthorised access; 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."

Deputy State Services Commissioner, John Ombler QSO, will lead the investigation.

"Mr Makhlouf believes that at all times he acted in good faith," Hughes said.

"Nonetheless, he and I agree that it is in everyone's interests that the facts are established before he leaves his role on 27 June if possible. Mr Makhlouf is happy to cooperate fully to achieve that."

Makhlouf will continue working during this period.

The commission is already holding an inquiry into the security of the Treasury's website, but Ardern said at her post-Cabinet press conference today that she expected the commission to look at the "quality of advice that was provided to ministers as well".

National Party leader Simon Bridges has called for Makhlouf to resign for implying that the party had hacked into the Treasury's website to obtain confidential Budget 2019 information.

But National staffers had simply used the website's search function, and police have said that nothing illegal appeared to have taken place.

Bridges has also called for Finance Minister Grant Robertson to resign for being "donkey deep" in what happened.

National has also asked for communications between Ardern said Robertson's office to be looked at, but Ardern said she had already released that information.

Last week Ardern said in the House that she had found out about the Treasury's referral of the matter to police only after Makhlouf had informed Robertson on Tuesday evening.

Ardern also clarified today that Treasury did not seek any Government advice before referring the matter to police, adding that that was appropriate because it avoided any perception that the decision was a political one.

She had not received an offer or resignation from Makhlouf.

"As of now I do not believe any resignation has been offered."

Last week the commission launched an inquiry into how confidential Budget material was accessed at the Treasury, but it is yet to decide whether to investigate Makhlouf's behaviour.

After National started to release Budget 2019 information ahead of Budget day, Makhlouf said last Tuesday that the Treasury had been "deliberately and systematically hacked".

He called the Police, citing advice from the National Cyber Security Centre (NCSC), an arm of the Government Communications Security Bureau (GCSB).

That reference escalated the seriousness of the issue and how the information was accessed, which was reinforced the following morning when Makhlouf said publicly that there had been 2000 attempts to access information in 48 hours.

However the NCSC said in a statement that the Treasury's computer system was not compromised.

"Given the incident did not involve a compromise of the Treasury computer network and was therefore not the type of incident the NCSC would normally respond to it was recommended that the matter be referred to police for their assessment."

Police told the Treasury the following day that nothing unlawful appeared to have happened, but this was not revealed until the Treasury released a statement on Friday morning at 5am.

National deputy leader Paula Bennett has also written to the commission, asking it to investigate whether Makhlouf and Robertson had misled New Zealanders.

On Tuesday night, after Makhlouf's statement, Robertson said: "We have contacted the National Party tonight to request that they do not release any further material, given that the Treasury said they have sufficient evidence that indicates the material is a result of a systematic hack and is now subject to a Police investigation."

In the following days, Ardern and Robertson said that no one was implying that National had hacked the Treasury website, and they were simply repeating what the Treasury had told them.

The commission cannot investigate whether Robertson's comments have been appropriate, as its jurisdiction does not include ministers.

Bridges also called for Deputy Prime Minister Winston Peters to publicly apologise for saying National had acted illegally - but Peters has stood by his comments.

On Friday a spokesman for the commission said that Peter Hughes was considering the allegations made by Bridges around whether Makhlouf smeared National, or misled the Minister of Finance.

If Makhlouf, who is leaving on June 27 to take up a role as head of the Irish Central Bank, has been found to have misled a minister or ministers, it would be considered a serious breach.

Bennett wanted Robertson's role in the saga to be looked at, as well as the communications between the Finance Minister's office and the Prime Minister's office under the "no surprises" approach.

What information Treasury and the Finance Minister had at their disposal before they issued those statements also needs to be investigated, Bennett said.

"The actions of the Secretary to the Treasury and the Minister of Finance in misleading the public in this way have had a detrimental effect in maintaining public confidence in a neutral public service that works without political influences," Bennett said in the letter.

"Without a full investigation that covers the issues I raised, it risks derailing the years of progress New Zealand has made as a world-leader in Open and Transparency."


  • Tuesday, 10:01am: In a press release, National publishes what it claims to be details of the 2019 Budget
  • Tuesday, 11:30am: Finance Minister Grant Robertson confirms "some" of the details in the press release were from Budget 2019
  • Tuesday, 1:30pm and 4.01pm: National releases more budget details
  • Tuesday before 6pm: Treasury asks the National Cyber Security Centre (NCSC) about how confidential information on its website was accessed. The NCSC says the Treasury's computer network was not compromised, and the matter should be referred to the police given that it's not what the NCSC would normally respond to
  • Tuesday, 6pm: Treasury Secretary Gabriel Makhlouf refers the matter to the police
  • Tuesday, 7pm: Makhlouf informs Finance Minister Grant Robertson that he has referred the matter to the police
  • Tuesday, 7:20pm: Prime Minister Jacinda Ardern is informed of the situation
  • Tuesday, 8:02pm: Treasury issues press release saying it had "sufficient evidence" that it had been "deliberately and systematically hacked". It cites the NCSC advice in saying it has been referred to the police
  • Tuesday, 8:19pm: Grant Robertson issues a press release, asking National not to release any further information because "the material is a result of a systematic hack".
  • Wednesday, 7:04am: Makhlouf said there had been 2000 hacking attempts in the 48 hours
  • Wednesday, 9am: Simon Bridges strongly denies the information National released came into its possession unlawfully, but refuses to say how the information was obtained.
  • Wednesday afternoon: Deputy Prime Minister Winston Peters says he knows National has acted illegally.
  • Wednesday night: Makhlouf informs Robertson that police have advised that nothing illegal appears to have happened, and a statement will be released in the morning.
  • Thursday, 5:05am: Treasury releases police advice that the information was obtained in a way that does not appear to be unlawful
  • Thursday, 8:45am: Simon Bridges fronts a press conference where he outlined how National used a simple search function to get the info. He calls for Robertson and Makhlouf to resign, and for Peters to apologise
  • Thursday afternoon: Peters stands by his earlier comments and won't apologise. Says lawyers, such as himself, would know what constitutes illegal activity better than the police
  • Thursday: State Services Commission, at Makhlouf's invitation, launches inquiry into how Treasury's Budget information was accessed. Says it is considering the serious allegations made by Simon Bridges.
  • Friday: Paula Bennett writes to SSC to ask for it to investigate Makhlouf and Robertson and whether they have acted appropriately
  • Today: Ardern says she expects the commission to look into the quality of advice that Treasury provided to ministers. Hughes announces new investigation into these matters shortly afterwards.



Saturday Morning with Jack Tame

Saturday Morning with Jack Tame

9AM - 12PM