The United Kingston, New Zealand and Australia have reportedly suspended their funding of the Commonwealth Secretariat, the body that runs the international organisation from London.
According to the BBC, UK diplomats have told secretary-general of the Commonwealth, Lady Patricia Scotland that Britain’s annual £4.7m voluntary contribution will be withheld until her secretariat improves its financial procedures.
The UK decision came after Lady Scotland was criticised by auditors for “circumventing” usual competitive tendering rules when she awarded a lucrative consultancy contract to a company run by a friend. The audit committee report claimed that the consultancy firm, owned by Lord Patel of Bradford, a friend of Lady Scotland and a fellow Labour peer, was “apparently insolvent” at the time with debts worth more than £40,000.
The report also stated that the Commonwealth Secretariat was unable to provide the auditors with KYA Global’s final report setting out its recommendations. The auditors also discovered that procurement rules had been waived by the secretariat on no fewer than 50 occasions over three years.
“We are committed to an effective Commonwealth that delivers for its member states, so we have set a number of conditions on UK funding to the Commonwealth Fund for Technical Cooperation for this financial year.”– Foreign Office spokesperson
New Zealand and Australia have also suspended their discretionary funding to the Commonwealth Secretariat until its financial systems are tightened up and tested by external auditors. New Zealand has also put its £1.5-million contribution on hold while Australia has cut its funding to the Commonwealth Secretariat by £414,000 and has made its remaining contribution of £260,000 contingent on the reforms being implemented.
The decision by these countries threatens to plunge the secretariat into a financial crisis and will raise fresh questions about Lady Scotland’s leadership. Commonwealth heads of government have already rejected calls to give Lady Scotland an automatic second term of office when it comes up for renewal this year.
The funding crisis came to a head last week when Commonwealth high commissioners in London, who together form the organisation’s Board of Governors met to discuss the results of the investigation by the external accountancy firm KPMG. However, the Commonwealth Secretariat is insistent that it was implementing recommendations made by external auditors.
About two-thirds of the Commonwealth Secretariat’s funding, some £18.4m in 2018 comes from automatic subscriptions from member states. But there is also a second budget for the secretariat, the Commonwealth Fund for Technical Cooperation, which is discretionary and provides about a third of its funding, worth about £12m in the most recent audited accounts.
The UK is the largest contributor to this fund. A senior British diplomat wrote to Lady Scotland on February 3 to say that continued UK funding would be suspended until the Commonwealth Secretariat complied with the recommendations of the KPMG report.
These conditions included a register of occasions when procurement rules were waived, a register of real and potential conflicts of interest, and an updating of the body’s whistleblower policy. The official gave the secretariat a deadline of February 21 to implement all the reforms which would have to be signed off by the chairman of the Commonwealth’s independent audit committee.
A spokesperson for the Foreign Office said: “We are committed to an effective Commonwealth that delivers for its member states, so we have set a number of conditions on UK funding to the Commonwealth Fund for Technical Cooperation for this financial year.
“These include conditions relating to ensuring that the Secretariat’s procurement policy and its implementation are in line with international best practice.” The Commonwealth Secretariat is expressing confidence that the funding will be restored pointing out that it fully accept the recommendations of the recent KPMG internal audit report on procurement across the 2015 – 2018 financial years.
All six of the recommendations were accepted and all, but one, have been implemented. A Commonwealth spokesperson told the Caribbean Media Corporation (CMC) that the remaining recommendation will be implemented by the end of February 2020.
The Commonwealth Secretariat said that Lady Scotland was “unavailable” but the spokesperson added “the follow-up audit in April will test and verify this position.