Cronyism scandal: Aussies join NZ in holding money back from the Commonwealth Secretariat

It’s great to hear the Anzacs are sticking together and Australia has joined New Zealand in withholding funds from the Commonwealth Secretariat.

The Sydney Morning Herald says the Morrison government will slash funding to the secretariat in retaliation to a cronyism scandal that has sparked an international feud over its secretary-general.

In a decision that undermines Baroness Patricia Scotland’s plan to remain in the top post, Australia has cut $800,000 from a fund earmarked for the London-based Commonwealth body and will refuse to hand over the remaining $500,000 unless flaws in how it operates and hands out lucrative contracts are fixed.

As Point of Order reported on February 1, New Zealand is withholding $3 million of funding for the secretariat.

A brief statement has been issued by the Ministry of Foreign Affairs and Trade:

An independent audit report by KPMG has identified significant weaknesses in the Commonwealth Secretariat’s approach to managing procurement. As a result, New Zealand has put on hold its voluntary financial contribution to the Secretariat until we receive independent confirmation the recommendations from the audit report have been addressed by the Secretariat.

New Zealand currently provides approximately NZ$4.45 million each year in total funding to the Secretariat and has put on hold NZ$3 million. The remainder of this year’s funding, a mixture of voluntary and compulsory contributions, had already been paid prior to the release of the audit report.

But the withholding of this money – curiously – hasn’t been mentioned in any of the dozen or so press statements from Peters’ office so far this year.

Probably as a consequence (because they are seriously impeded without PR handouts) news media have been sparse in their coverage of the secretariat scandal and New Zealand’s response.

David Farrar, on Kiwiblog on February 4, posted an item headlined NZ pulls Commonwealth funding

He referenced a Daily Mail  report and observed:

I’m surprised this hasn’t had more publicity in NZ.

Anyway good to see the NZ Government pulling the plug due to wasteful spending.

Hopefully funding will be restored once there is a new Secretary General.

Point of Order found only two reports on this matter in mainstream media, both by broadcasters –

  • TV One, February 1New Zealand pulls funding for Commonwealth Secretariat following questions over tending process
  • Newstalk ZB, February 11Sir Don McKinnon: Concerns about Baroness Scotland and the Commonwealth Secretariat

Australia’s decision to cut nearly £500,000 in annual funding for the secretariat and refuse to hand over the remaining £250,000 payment unless there is a financial shake-up was confirmed by foreign minister Marisa Payne.

The Sydney Morning Herald said in its report on the decision:

Australia and New Zealand are leading a push to block Baroness Scotland – a minister under Labour prime ministers Tony Blair and Gordon Brown – from a second term leading the body after an audit savaged her decision to waive usual tender rules and hand work worth nearly $500,000 to a firm run by a friend and colleague from the House of Lords.

A spokesman for the Department of Foreign Affairs and Trade told The Sydney Morning Herald and The Age that Australia had reduced its annual contribution to a key Commonwealth fund from $1.3 million to just $500,000 “in response” to the audit by accounting firm KPMG.

“And this new funding amount will be paid only after there is independent confirmation that the issues identified in the audit have been addressed by the Secretariat,” the spokesman said.

The audit was highly critical of Baroness Scotland’s decision to “circumvent” standard tender rules to hand a contract to KYA Global, a company owned by Lord Patel of Bradford, a fellow Labour peer and someone she once said deserved to be nominated as “man of the year” at a British leadership awards event.

An audit committee document found the contract was awarded on Baroness Scotland’s “personal recommendation”, in part because her former colleague had a “high level of proven trust”.

The usual tendering rules were waived and a £90,000 contract was granted, followed by another worth £162,000 plus tax.

The secretariat didn’t have a register to record potential conflicts of interest.

But there’s more to Australia’s dissatisfaction with Lady Scotland than the issues raised in the auditors report.

According to the Daily Mail:

Miss Payne was furious last year when she discovered Lady Scotland had invited world leaders to a cricket match in Australia without first informing the government in Canberra.

She complained in writing to Lady Scotland, accusing her of lacking ‘basic courtesy’ and ‘inappropriate’ conduct.

Australia’s withholding of funds is reported to be the latest in a series of setbacks to the 64-year-old baroness including being forced to close a ‘Commonwealth Hub’ in London as a result of the secretariat’s cash crisis. Dedicated to the Queen, the centre had been open for only four years.

A decision on Lady Scotland’s future is expected to be made at the Commonwealth Heads of Government Meeting in Rwanda in June if she is not pressed to step down earlier.

Britain’s Boris Johnson is said to be supporting moves to persuade Amina Mohamed, a 58-year-old Kenyan politician, to challenge Baroness Scotland for the £160,000-a-year job. Born in Somalia, she learned English by reading Sherlock Holmes novels as a child.

She studied at Oxford and is a qualified lawyer.

This is not the first time Lady Scotland has been accused of cronyism and financial mismanagement.

A report in 2016 disclosed that she spent £338,000 on refurbishing her grace-and-favour apartment in Mayfair, central London.

Further investigations revealed she had spent £590,000 of the UK’s foreign aid budget on Marlborough House, the Commonwealth’s headquarters, over a period of two years.

She has also been called out for appointing political allies to key posts.

Lady Scotland has been Secretary-General for almost four years, with her first term due to expire at the end of March.

Although a number of member states have supported giving her a second term, a majority have rejected the plan to offer Lady Scotland another four years, according to a survey of the 53 Commonwealth heads of state carried out by the British Government.

The Commonwealth Secretariat, established in 1965, is the main intergovernmental agency of the Commonwealth, facilitating consultation and co-operation among member governments and countries. It is responsible to member governments collectively.

Based in London, UK, the Secretariat organises Commonwealth summits, meetings of ministers, consultative meetings and technical discussions; it assists policy development and provides policy advice, and facilitates multilateral communication among the member governments. It also provides technical assistance to help governments in the social and economic development of their countries and in support of the Commonwealth’s fundamental political values.

The Secretariat is headed by the Commonwealth Secretary-General who is elected by Heads of Government for no more than two four-year terms.

The Secretariat and its work are funded by three separate budgets or funds – namely, the Commonwealth Secretariat Fund, the Commonwealth Youth Programme (CYP) Fund, and the Commonwealth Fund for Technical Co-operation (CFTC).

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