Yesterday morning’s news was an NBR headline – story accessible only to those with a subscription – in which the Reserve Bank appeared to have confirmed to this single media outlet that Deputy Governor, Geoff Bascand (a statutory appointee, and member of the Monetary Policy Committee) had left his job early, after speaking without authorisation to a third party about the Bank’s management restructuring. Later in the day, we got more accessible versions of this astonishing development (including this interest.co.nz account).
Bascand had been a public servant for a period spanning 40 years, starting in The Treasury in the 80s, and including stints as head of the Labour Market Policy Group (at the old Department of Labour), Government Statistician, and (since 2013) as Reserve Bank Deputy Governor. His public sector career had had its ups and downs, and he never quite reached the very top levels, but what a way to end it. In many ways, he was a classic public servant – most people seemed to like him, quite a few respected him, he wasn’t (it seemed) flamboyant or reckless. He went along. He wasn’t an intellectual leader, but he got things done. He didn’t seem to stand on titles etc – I was quite impressed that he was willing to take the step back from a CEO role at SNZ to (initially) the third-ranked position at the Reserve Bank (even as I assumed at the time that he saw it as a stepping stone back into the policy-institution mainstream, perhaps with aspirations to be Governor or Secretary to the Treasury). And in 2017 he was quite (unusually) open (to media) that he’d applied for the Governor’s role, knowing (presumably) that even as incumbent (but new) deputy chief executive he probably had no better than a 50/50 chance. In the first three years of the Monetary Policy Committee, he had been by far the least-unimpressive of the members, and gave speeches that were sometimes almost worthy of a member of a powerful independent policymaking committee in an advanced country.
I first met Geoff 35 years ago, but had only had off and on contact with him until he came to the Bank. We then sat on many of the same committees, but I left the Bank a couple of years later, and my main dealings with Geoff were actually over the last 8 years when we were both trustees of the troubled Reserve Bank staff pension scheme and spent too many hours locked in long meetings. We had our differences there – sometimes quite stark, sometimes on quite important issues – but in recent years in particular we seemed to have got on well, and even together crafted a resolution to one of the lesser issues the scheme was dealing with. I say this mostly as context. I don’t wish Geoff any ill at all.
When it was announced a few months ago that Bascand was leaving the Bank at the start of 2022, it wasn’t entirely clear what was going on. One plausible story was that at his age (60ish), unlikely now to ever become Governor, he’d simply opted for a slower pace of life – golf, grandkids, and some directorships/consultancies etc. Another was that he had become so frustrated with the Orr approach that he simply wanted out. The two weren’t incompatible necessarily, but if you are part of a project you are totally at one with, it isn’t usual to simply walk away – in good health, and not that old. But the new governance structure for the Bank was coming in mid-2022, and he might also have thought someone needed to be willing to commit several years to bedding in the new model. There was always the possibility Orr wanted him out, but as holder of a statutory office appointed by the Minister there was no direct way of effecting that, despite the reputation Orr had long had for churn among his senior staff. The speed with which Bascand’s replacement was announced – with no advertisement etc process – did tend to reinforce suspicions.
The concerns about top-level departures started to step up in November when it was announced that the Bank’s Chief Economist was leaving after less than three years in the job – having been appointed by Orr, it was quickly apparent he was being restructured out by Orr (Orr having restructured out the previous Chief Economist). Questions started to be raised, including at Parliament’s Finance and Expenditure Committee. With inflation rising sharply, and unease (justified and not) about the Bank’s handling of monetary policy through the Covid period, the Governor’s position was becoming somewhat exposed.
But there was more to come. The management restructuring was ongoing and now claimed the two senior managers responsible for banking regulation and supervision, who had been direct reports of Geoff Bascand’s (as deputy governor and head of financial stability). We still don’t know the details of the restructuring – the Bank is playing OIA obstruction – but both Andy Wood and Toby Fiennes decided to leave, their own previous jobs presumably having disappeared (Fiennes already having been effectively demoted in an earlier Orr restructuring). That might prove quite uncomfortable for the Governor, with annual select committee hearing coming up on 15 December (this time the annual Financial Review, focused on the year to 30 June, but allowing a very wide range of issues to be raised).
And so, it seems (Orr did not deny it when questioned on it at FEC), the Bank decided to keep this news secret (from staff and the public) until after the FEC hearing was over.
And yet the news got out, with a story from Business Desk’s Jenny Ruth late the previous afternoon (and a statement from the Bank confirming the departures). Orr faced repeated questions at FEC the following day (I wrote about it here), and some of the answers from him and his team proved to be quite misleading. There was a lot of bluster, and the Governor did not emerge well.
There were a couple of straws in the wind – no more – that week that suggested that the Bascand situation was less than happy. Watch the FEC hearing (accessible on the FEC Facebook page) and you will see that Bascand was there – Orr even mentions it at one point – but in the back seats with the large group the Bank brought along. That was odd. Bascand was at this point still the incumbent Deputy Governor, and the hearing was formally focused on the 2020/21 financial year. It wasn’t that there wasn’t room at the top table – Orr was joined there by the incoming Deputy Governor and one of the his many more-obscure Assistant Governors. Not having Bascand up front – and several MPs have made generous comments about Bascand – looked not quite right.
And then on the Friday of that week, Bascand simply did not turn up for a long and important meeting of the superannuation scheme trustees, a meeting that had been scheduled explicitly to draw on his expertise and experience before his scheduled departure in the first week of January. His replacement had already been appointed (from 5 Jan) and invited to attend the meeting as a silent observer. Initially not suspecting anything – other than idly wondering what financial stability drama there might be on 17 December – I asked the chair if Geoff had then nominated the replacement as his (legal) alternate, which would enable that person to participate fully. It would have been a natural thing to have done if something had come up and Geoff was simply too busy. But all we got was a rather flustered “no”.
But none of that took one anywhere, at least until yesterday’s story.
The story did not tell us what Bascand had told to whom, only that he had had unauthorised discussions with an outsider, had confessed and apologised, and had left the Bank on 17 December, several weeks before his scheduled (early Jan) departure date.
So it is hardly a stretch to suppose that he was the ultimate source of the 14 December story about the further senior management departures – since it (a) involved people who had directly worked for him for several years, and (b) came out late on 14 December, and while he was still there (FEC) on the early morning of the 15th he was gone by the 17th. Most probably Bascand didn’t directly communicate with the journalist who broke the story – although even had he done so, the journalist would have needed independent confirmation to help provide cover to her source – but may well have told someone with the explicit intention that the news get to a journalist with a reputation for taking RB issues seriously. (It is quite clear, on the other hand, that these unauthorised discussions weren’t, say, a passing mention to his wife – the consequences, confirmed by the Bank yesterday, tell us it was much more serious than that.)
There can’t have been many people at the Bank who knew (on say 13 Dec) that Wood and Fiennes were going. The Governor, the incoming deputy (who would soon be responsible for financial stability), perhaps the Assistant Governor responsible for HR, perhaps the respective PAs, Wood and Fiennes themselves, and Bascand. Bascand either because he was still incumbent Deputy Governor or because either or both of Wood and Fiennes would most likely have talked to Bascand – their boss for several years, but not now the person driving decisionmaking – before making their final decisions. Only disgruntled people had an incentive to leak, which would have quickly narrowed the field, and Bascand apparently confessed, apologised, and agreed to go early. It could reasonably have been seen as a sacking offence but (a) no doubt the Bank wanted to keep this quiet, and (b) getting rid of a statutory officeholder isn’t quite like dismissing an ordinary staff member.
Why would Bascand have done it? Presumably the motive was pure and simple to put Orr on the spot at FEC, perhaps driven by frustration at how his loyal and capable senior staff had been treated. But it was still a strange step for someone like Bascand – the mostly fairly buttoned-down bureaucrat – to have taken. After all, although the FEC hearing became more of a spectacle, and more uncomfortable for Orr, it wasn’t as if this was really whistleblowing – the FEC hearing itself was never going to be decisive (of anything), and the Bank would have announced the departures a day or two later anyway. If – as I think there are – there are serious questions to be asked about Orr’s stewardship, a couple of days wasn’t going to make much difference in the scheme of things. Perhaps Geoff was just at the end of his tether?
If this is the story – and while it seems likely we can’t be certain – did he suppose he’d not be found out? Perhaps, but why take the risk? Perhaps he thought there weren’t really any downsides for him? But if so, he was wrong. Leaving two weeks early a job you’d resigned from anyway isn’t the cost. But yesterday’s story is. I guess that story wasn’t guaranteed to leak out, but….Wellington is a small place, and who knows what story staff were told as to why Geoff wasn’t around for his scheduled last few days.
It is simply a really bad look. Even real whistleblowers – of information about (a) misbehaviour that (b) would never otherwise come out – rarely prosper (even though society needs such people). But this wasn’t whistleblowing – Orr was within his rights to restructure, and the news was going to come out anyway – and just looks rather petulant and undisciplined. And whatever you think of Orr’s stewardship of the Bank, a senior figure behaving this way – breaching his obligations (moral and otherwise) is unlikely to endear himself to people (government or private sector) considering Geoff for future directorships and consultancies. If he had real concerns about Orr’s stewardship – and he should have – a detailed letter to the Minister of Finance, after he had left the Bank, might have been in order. Perhaps even a serious interview with a major media outlet a few months down the track (Orr is up for reappointment early next year), although in cosy Wellington even that would have raised eyebrows. But not leaking to the media – with a high probability of being found out – simply for some short-term additional embarrassment for the boss. (And it is not as if Geoff in the past has not expressed firm views on anyone speaking out in a way that might embarrass him or those he supports.)
I was glad the news of those further senior management departures got out in time for FEC, was glad to see National and ACT MPs asking hard questions of Orr – and hope they now follow up further – but what Bascand (who had obligations to the Bank) appears to have done was quite inappropriate and unacceptable, and it is good that that news has belatedly come out. It is a sad way to end a long public service career.
But what a mess an important and powerful public agency is clearly in. So many key people going or gone, so little analytical, operational or policy excellence, so little banking or regulatory experience at the top of a major banking regulatory agency, and so on. Meanwhile, the Board chair who presided while all this went on has been given another term, and all indications are that none of this much bothers the person with the ultimate responsibility, the Minister of Finance. It should. We need to end, and reverse, the degradation of major New Zealand public institutions.
UPDATE: Continuing to mull over this business, I’m still a bit inclined to wonder if there is more to the story. Is there a possibility that Bascand took the fall, covering for someone else (for whom the consequences of discovery might have been greater)? I guess we’ll never know, and perhaps it is just that I don’t want to believe that someone like Geoff could have acted this way, even tired, even frustrated. There is something particularly treacherous about a deputy deliberately undercutting his boss in a way implied by the story told in this post. But probably only a couple of people know the truth of the matter, and they won’t be saying.
16 thoughts on “A sad ending”
Sad, just very sad. So many good ideas, so many valuable principles. Why did it not work out? It would be very useful to find out.
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I have some sympathy for Bascand. It could be that he was taking a principled stand based on facts we don’t know about, such as deliberate obfuscation or cynical misuse of the OIA for example. A penance for being an unwilling participant perhaps? I’m reserving judgement until there’s more information.
You may be onto something, considering the track record of the parties Orr is more suspect than Bascand who had little to lose so may have chosen to leak something to ensure the timing was critical to other decisions or information.
But precisely because so many questions automatically arise about Orr’s record/character etc, had he been more guilty of something here than Bascand, he had no need to risk exposure (as this story) by making Bascand go early. It was only a matter of a couple of weeks.
Sometimes people make mistakes, lash out, when they are at the end of their tether, tired etc.
Always good to look for the most charitable interpretation of events.
That said, it is difficult to see a legitimate time for a public servant to leak – other than actual whistleblower stuff – and perhaps esp not one so senior who could have had ready access to (a) the Board chair, (b) the Minister of Finance or other ministers, (c) the Secretary to the Treasury first if he’d had major concerns about issues re Orr that needed remedying.
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I presume you mean the RBNZ as a whole. Sadly it is just a part of the general degradation of public institutions in NZ over the last 20 years, just more visible in the RB case as a high profile independent policy making agency. There is little sign the public or politicians care much, in turn perhaps partly a reaction against the reform period of 30 yrs ago incl the failure to deliver good outcomes (improving relative productivity growth, affordable house prices etc). All exacerbated by the dependence in any small country/institution by the presence/absence of a handful of good people.
But yes, so very sad.
“The degradation of our major public institutions” including the Reserve Bank is alarming. In the US, Biden has lost control of the economy and inflation is now pushing 7 percent which could see interest rates very soon hitting 10, even 12 percent. This will inevitably impact New Zealand where our own core inflation is already rapidly escalating thanks to shonky monetary policy and poor quality government spending. We will soon find ourselves in a deep hole and a lot of people, especially those holding substantial mortgages, are going to take a bath. A very poor outlook.
I was quite shocked to see this story emerge ln Stuff yesterday. Geoff’s behaviour was, as you say, inappropriate, and the pubishment hes going to have to endure isnt the early departure, its the tarnished reputation, most likely ending a long career of service. In this world i dont see how anyone can look past such a breach of trust in employing him. I can appreciate how he may have felt but he made an error of judgement. The whole story is just sad, and will leave morale and trust inside the bank damaged.
Perhaps Bascand didn’t really mean it when he said, “Lastly, I want to thank my team and colleagues for the shared endeavour, the wisdom I have gained from them, and the fun we have had together”. Theoden’s line from the Lord of Rings springs to mind…’how did it come to this?’
But the word you should have in your title is ‘tawdry’: No one come out of this episode looking good.
Ah yes, I smiled wryly when I reread that final speech too.
I had wondered about your word for the title, but my overwhelming response – emotion even – was sadness, that someone I quite like had (it appeared) done something so rash and apparently out of character. Reflecting further, it leaves me wondering if there is still more to the story.
This is at a time when inflation is out of the box and challenges for NZ s economic health very apparent.
The RB has a job to do and they must do it as well as possible.
Public division and politicking will only harm longer term NZ.
It cannot be ruled out the Jenny Ruth observed a subtle clue about senior staff leaving. That could have prompted her to ask Bascand. For example, I learned about the departure of one of our (former) professors because he had put his house for sale (not a very subtle sign, but observed by few). In academia, it is common that people present their work at other universities. So, if someone gives a lot of presentations at other universities in a short time, you can bet that the person is applying for a position elsewhere.
From my previous job, I remember a colleague leaving important meeting papers at a railway station located closely to the offices of a news radio station.
There’s a lot of ways information can leak, intentionally or not.
All true, but in this case the Bank says Bascand acknowledged and apologised for his actions, which certainly suggests something deliberate.
Commendable from Geoff to take the fall, if that happened.
The fact is that Bascand finished his statutory term 6 months early with nothing concrete to go to. This doesn’t suggest it was voluntary, rather the opposite. Perhaps there was something they chose to hang him with: Controversial Bank Capital increases, Trade Valuations,CBL, Westpac, the Accellion data hack.
Whilst your interpretation is charitable, a much more plausible explanation is that Bascand bemoaned his situation to someone either in, or well connected to, the National party – they then leaked the ‘story’ to the journalist in order to create maximum discomfort for Orr, it’s well known there is no fondness, past and present, in the National party for Orr.
It would be nice to think that Bascand fell on his sword to protect his colleagues, but, in truth he didn’t have an aversion over the years to putting many of his colleagues to the sword when it suited his purposes – the large increase in his salary by the current Governor no doubt helped assuage any qualms he may have had in applying his swordsmanship towards creating ‘Great Team, Best Central Bank’…..an increasingly non sequitur statement given recent events.
In Bascand’s own words, it appeared he ‘failed to do his due diligence’ in talking to whoever he spoke to, as they have filleted him up nicely…live by the sword, die by the sword as they say. However, the problem is, as one of your commentators notes, the RBNZ is becoming increasing politicised (much of it through their own making), this can only weaken the institution’s credibility and effectiveness….not an ideal backdrop for a Central Bank when inflation is rearing its head.
Who knows? (altho after last week’s episode I’m more confident than I was that Bascand’s initial resignation wasn’t just about “golf and grandkids”, but must have reflected a deeper breakdown between him and Orr.)
Largely agree with your final sentence, altho I think the issue is less one of politicisation – I don’t think Adrian takes his lead from anyone, let alone Ardern/Robertson – as a rogue CE, with few/no redeeming qualities for the roles, with a Minister of Finance who shows no interest in the ongoing degrading of the standing and capability of the institution.