Climate of fear during inquisition

Over the course of months, most of Wellington's elite were summoned to a meeting room deep within the central city tower building occupied by the Ministry of Foreign Affairs and Trade and asked to swear on oath that they did not leak documents detailing plans to gut the organisation.

Seated across the table was former Commerce Commission boss Paula Rebstock, usually with a staffer by her side.

Others were ordered to phone in or give evidence by video conference from every corner of the globe.

Some of those summoned to account for themselves report it was a "hostile and intimidating" atmosphere. Others who insist they are not so easily intimidated admit they found it unpleasant if nothing else.

No wonder. When she was appointed to head the inquiry in May 2012, Rebstock was granted extraordinary powers, including the right to compel witnesses to appear and give evidence under oath.

In the course of her investigation into the source of Cabinet leaks and other "unauthorised" disclosures, Rebstock's team interviewed more than 120 people, some of them more than once, including senior government ministers, Beehive staff, senior Treasury and State Services Commission officials, the heads of agencies -including the Department of Prime Minister and Cabinet - and some of New Zealand's most accomplished diplomats.

They also trawled through personal emails and photocopy logs, obtained expert analysis of TVNZ and Parliamentary TV footage of Labour MP Phil Goff, both in Parliament and in his office, reviewed swipe card records for all Mfat staffers, and analysed phone records for calls to and from numbers of interest, and for "high volumes of calls and call patterns that could not be easily explained".

Eighteen months and $500,000 later, the inquiry admitted on Thursday it had failed to find any conclusive evidence pointing to one person as the leaker.

But it voiced "strong suspicion" that the leaks which sparked the inquiry, three sensitive Cabinet papers, originated not from Mfat but the State Services Commission. It fingered a former Labour Party staffer working there as a temp as the likely culprit.

In a potentially chilling extension of its powers, however, the inquiry then went on to publicly hang out to dry former diplomats Nigel Fyfe and Derek Leask, not for leaking, but for challenging the restructuring plan being pushed through by chief executive John Allen.

Among the material it published were private email exchanges between the two, gathered during the hunt for the Cabinet paper leaker, and then used against them once the inquiry's terms of reference had been broadened some months down the track.

In one email, the two former diplomats talked about strategy and needing to "put pressure on the bastards" in what the inquiry saw as evidence of them plotting against the Allen plan.

While the report did not name them it made little effort to disguise their identities and their names were in circulation almost immediately.

The charge from Rebstock was that their behaviour fell below the standards expected of people in their position.

Both men have hit back, and reject the validity of the findings. They described the emails as the sort of "water cooler" conversations everyone around Mfat was having at the time.

But Foreign Minister Murray McCully went further, labelling their behaviour unprofessional and disreputable.

That has drawn a sharp intake of breath, and not just within Mfat but among former diplomats who believe Mr Fyfe and Mr Leask have been unfairly singled out.

Among the behaviours the two men are accused of is "seeking to influence the chief executive of DPMC and the Prime Minister's Office to intervene" in Mfat's restructuring process.

But as one Government insider notes, there is nothing extraordinary about diplomats copying in ministers and agencies like DPMC to their communications.

Diplomats channel most of their communications through a wide network, particularly when it deals with issues believed to have an impact on "NZ Inc".

"The way in which posts report to Wellington and then copy in other agencies is the way things happen."

Certainly, it does not seem as if anyone within DPMC or ministerial offices in the Beehive was particularly surprised to receive emails from heads of mission and other diplomats concerned about the Allen proposals.

Nor did anyone consider it inappropriate, says one insider.

Under Allen's plan, hundreds of jobs would have been cut, pay and conditions for many senior diplomats were slashed, and many serving heads of mission were in limbo as to whether they would have a job when they returned from overseas.

Many of the country's diplomats were worried about the foreign policy implications of the changes and the issues they were raising had been discussed openly in the public arena for months, including downsizing posts in Europe.

It was only when those emails started circulating in the public arena, and fell into the hands of Goff, that ministers and senior Beehive staff became alarmed.

Mfat senior management was enraged, meanwhile, that staff had bypassed a secure website through which it wanted all "consultation" on the change proposal channelled.

But it appears that many staffers were alarmed by the attitude of senior managers, who seemed to view the restructuring in isolation from the Government's wider foreign policy priorities, including the impact on agencies including Trade and Enterprise, Defence and Immigration, and wanted it all dealt with in-house.

There was also suspicion about McCully, who was seen as driving much of the push against some of the more senior diplomats and who increasingly had a hand in appointments and movements within the ministry.

Fuelling the rift was a leak detailing the salary and allowances paid to most of the senior diplomatic corp, seen as a deliberate attempt to set public opinion against the ‘fat cats' at Mfat.

The inquiry investigated that leak but surprisingly had little to say about it other than it was probably done by a contractor.

By that stage, fear that the process was going off the rails had also started percolating within the Beehive and culminated in Prime Minister John Key ordering the heads of Treasury, the State Services Commission and Treasury to take charge.

Treasury Secretary Gabriel Makhlouf, State Services Commissioner Iain Rennie and DPMC chief executive Sir Maarten Wevers also made an extraordinary call on McCully, apparently in response to alarm expressed by both Key and Finance Minister Bill English that the restructuring proposals had the potential to damage New Zealand's interests overseas.

It was clear by this stage that the whole of Mfat was up in arms.

At an extraordinary gathering of heads of mission after they were flown back to Wellington from around the world, there was a "robust" to-ing and fro-ing over the issues.

Sir Maarten is said to have delivered a rocket to the gathered diplomats at that meeting about some of the leaks and instructed them to resolve their differences with management.

The Dominion Post