The Reserve Bank has revealed more details behind the shock resignation of former governor Adrian Orr in March, which has now been attributed to a “distressing” disagreement over the central bank’s funding.
Finance Minister Nicola Willis and bank officials have been tight-lipped for months over the departure of one of the Government’s most senior public sector bosses.
But documents released today reveal he disagreed with Willis and the Reserve Bank’s board over how much operational funding the bank would need. Funding for the central bank is negotiated directly with the Government in five-year terms.
According to an updated statement from the Reserve Bank, by February 27, “it was clear that the board and Minister of Finance were willing to agree to a considerably lesser amount than the amount Mr Orr thought was the minimum necessary.
“This caused distress to Mr Orr and the impasse risked damaging necessary working relationships, and led to Mr Orr’s personal decision that he had achieved all he could as Governor of the Reserve Bank and could not continue in that role with sufficiently less funding than he thought was viable for the organisation.
“Mr Orr and [board chairperson Neil] Quigley entered discussions which led to Mr Orr’s decision to resign.
“Both parties engaged senior counsel to negotiate an appropriate exit agreement. In the circumstances, an immediate departure and special leave for Mr Orr was appropriate, although he agreed to provide handover support.”
Orr left his job three years before his five-year-term was due to end.
Leak concerns led to abrupt announcement
The abrupt nature of his departure was attributed to concerns that information about his resignation might emerge from sources outside the Reserve Bank (RBNZ) before an official announcement could be made.
“After Mr Orr raised concerns about sources outside RBNZ potentially being aware of his intended resignation, he and RBNZ agreed to make the announcement on March 5.”
Orr’s departure on March 5 meant he was notably absent from an international banking conference the Reserve Bank hosted the day after, which included speakers such as former US Federal Reserve chairperson Ben Bernanke.
The Reserve Bank confirmed today that Orr’s resignation announcement had been brought forward ahead of the event.
“Mr Orr was expected to open the conference. Initially it was planned that he would do so and the resignation would be publicly announced on the following Monday, March 10.”
RBNZ dismisses speculation over bank capital rules
The updated statement on Orr’s departure was issued shortly after midday, after a “near final draft” was mistakenly sent to journalists an hour earlier, the bank said.
The Reserve Bank’s earlier “draft” release included the amount of funding that Orr sought – $1.031bn – and referenced a meeting the former governor attended on February 24 with Willis and Treasury officials, which was removed from the new statement.
It was eventually agreed the bank would be allocated operating expenses of $750 million and capital expenditure of $25.6 million for the period.
In both statements, the Reserve Bank dismissed speculation that discussions about regulatory capital requirements for banks contributed to the resignation, stating their review “does not indicate that these discussions were significant to” his decision to quit.
Alongside the release of the statement, the Reserve Bank released a slew of documents surrounding Orr’s shock departure, while also withholding other information.
Multiple journalists and financial observers have had Official Information Act request deadlines about the former governor’s departure extended over the past several months.
Following’s Orr’s resignation, Christian Hawkesby was appointed acting governor, with the board required to nominate a temporary replacement within 28 days of the position becoming vacant. Hawkesby was later appointed to a six-month interim term from April.
Reason finally revealed after evasive answers
Orr had served in the role of governor for seven years at the time of his resignation.
When the former governor’s departure was announced on March 5, little reason was provided beyond that it was his “personal decision”.
During a press conference with reporters on the day, the Reserve Bank board chairperson was evasive when directly questioned whether funding issues led to the resignation.
On funding issues specifically, Quigley was asked whether “the Government communicated to you or Adrian any issues that triggered him” resigning.
He responded at the time: “No, there’s been no direct communication officially from the Government on anything that I could think of, in that way.”
Quigley was also asked whether there were any “policy, conduct or performance issues which are at the centre of this resignation”.
He responded: “We have issues that we’ve been working through, but there are no issues of that type that are behind this resignation.”
