Typically, a person would exaggerate their accomplishments or claim undue credit because they a) craved prestige; b) possessed low esteem; c) harbored envy or guilt for not being at the scene of the 'action'; 4) a combination of the above. So why did the MND spout off like that? He seemed to have proven his mettle in his army reserve and police work. What compelled him to embellish? And why did his staff allow him to utter such falsehoods. Aren't his speeches supposed to be carefully vetted? 

The MND strikes me as  decent, dedicated fellow, but willful misrepresentation of one's military record in a theatre of war should be unacceptable to any soldier and any government worth its salt. Let him resign, and his communications staff, too.  Or fire them all. Even if he cares nothing for morale within the armed forces, the PM must demonstrate his abhorrence of such practices, unless he is also untroubled by serial fakery.