I'm Treasury's scapegoat, says accused People's Bank mole

By FRANCESCA MOLD political reporter

The man blamed for leaking dozens of secret Government documents to an Opposition MP has accused Treasury of setting him up as a scapegoat for a problem now widespread in the public service.

Treasury secretary Alan Bollard yesterday accused Wellington consultant Peter Davies of downloading confidential reports and letters from a computer belonging to the Crown Company Monitoring Advisory Unit, a Treasury subsidiary.

Mr Davies was working for the unit as a consultant when he allegedly copied the secret documents to his computer from a central database two days before his three-month contract ended on June 28.

The information was passed to Act MP Rodney Hide, who embarrassed the Government by revealing potentially damaging details about the $80 million People's Bank and internal wrangling at New Zealand Post.

In a seven-page statement, Mr Davies last night denied responsibility for the leaks and said he had become a scapegoat for leaks that were now widespread in the public service.

He said the investigation had not properly examined computer security at CCMAU and whether someone else could have used his password.

"The careless investigative work of the inquiry has given me the impression that unless I somehow name the leaker along with his or her modus operandi, I must accept responsibility for the leaks by default," said Mr Davies.

He said he had been denied access to evidence collected during the inquiry and the investigation had ignored leaks of documents before his employment. "This has made the inquiry process inherently unfair and taints the final report."

He said the report was quick to damage his reputation while exonerating others, including parliamentary staff, without proper investigation.

Mr Davies said he was also concerned that during the time he was under investigation, the Herald and a political gossip sheet put out by law firm Chen and Palmer had published details of the findings before he had responded to the allegations.

Treasury's decision to name Mr Davies as the mole came as a surprise yesterday and raised questions about whether it would bring a defamation lawsuit because the announcement was made before any formal charges had been laid.

Dr Bollard said Mr Davies had been found to be responsible for "preparing and removing" the material, but there was no evidence to show how Mr Hide got it.

He said Treasury had received legal advice that naming Mr Davies was an issue of public interest and would clear up concerns about the ability of the public, ministers and state-owned enterprises to trust CCMAU staff with confidential information.

Treasury had yet to decide whether to take legal action.

Mr Davies' lawyer, Noel Sainsbury, said it was unlikely, because of the expense, that his client would sue Treasury for publicly naming him. "It would also just prolong the agony and if six months down the track they say it can't conclusively prove it was him, it's an awful lot of money and all anyone remembers is that he's been named as a leaker," he said.

Mr Hide said he had never met Mr Davies and the Government had "gunned down" the wrong man.

The case against Mr Davies largely hinged on a draft letter which existed in cyberspace for just an hour and a half.

Former Justice Secretary David Oughton, who was hired by Treasury to investigate the leaks, said the letter was e-mailed by CCMAU to State-Owned Enterprises Minister Mark Burton on the morning of June 26.

An hour and a half later, Mr Burton replaced it with a significantly altered version.

The next morning, a Herald journalist contacted CCMAU and Mr Burton with questions about a leaked copy of the original letter.

The first version's short life helped Mr Oughton narrow the search to a handful of people, and a check of computer records showed Mr Davies was the only employee to have illegitimately accessed the draft letter.

Mr Oughton said the search showed that Mr Davies had accessed all seven leaked documents being considered by the investigation by scanning them or copying them on to a disk.

Dr Bollard said Mr Davies had copied a large amount of other material, but that did not appear to have been leaked.

Treasury was considering whether to try to recover the missing documents, which contained mostly outdated information. It was also reviewing its computer security.