UK, New Zealand, Australia suspend funding to Commonwealth Secretariat over breach of tender rules
London, Feb. 12, 2020 (AltAfrica)-The British government has joined the governments of New Zealand and Australia to suspend their funding of the Commonwealth Secretariat, the body that runs the international organisation from London, the BBC has learned.
The three countries have told Lady Scotland, the secretary-general of the Commonwealth, that there annual voluntary contribution estimated in the region of about £6m will be withheld until her secretariat improves its financial procedures.
The Commonwealth Secretariat is the central administrative hub for the intergovernmental organisation that comprises 54 countries – many of them former British colonies – and encompasses almost a third of the world’s population.
The decision to withhold funding 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 resulting report by the Commonwealth’s audit committee accused Lady Scotland of “circumventing” the usual competitive tendering rules by awarding a £250,000 commission to KYA Global to carry out a review of the secretariat.
The consultancy firm was owned by Lord Patel of Bradford, a friend of Lady Scotland and a fellow Labour peer.
The Secretariat insisted it was implementing recommendations made by external auditors.
The auditors also discovered that procurement rules had been waived by the secretariat on no fewer than 50 occasions over three yea
The problem threatens to plunge the secretariat into a financial crisis and will raise fresh questions about Lady Scotland’s leadership.
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.
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.
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 3 February 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 21 February 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.”
A Commonwealth spokesperson said: “The Commonwealth Secretariat does not comment on private exchanges with its member countries.
“The Secretariat complies fully with the audit process and implements recommendations accordingly.”