Financial Mismanagement in Pakistan’s Diplomatic Missions: A Call for Accountability

Zafar Iqbal

For years, Pakistan has grappled with a culture of extravagance, financial mismanagement, and a general disregard for basic principles of fiscal responsibility within its government departments and ministries. This issue is not only limited to domestic operations but extends to the country’s diplomatic missions abroad. As the country faces a challenging economic situation, this persistent issue of inefficiency and negligence within the government’s financial management has exacerbated the strain on public resources, further undermining Pakistan’s fiscal health.

A recent audit report from the Auditor General of Pakistan (AGP) sheds light on the alarming financial irregularities within several Pakistani diplomatic missions, raising serious concerns about the management of public funds by foreign missions. The report reveals that these diplomatic missions have been involved in unauthorised payments, violations of procurement rules, and general financial mismanagement, all of which point to a significant lack of oversight, accountability, and transparency within these institutions.

Among the most egregious findings highlighted in the report are those from the Pakistani embassy in Berlin. The embassy was found to have engaged in multiple irregularities, such as failing to adhere to procurement protocols when acquiring various items, neglecting to follow competitive bidding processes, and failing to maintain essential records like receipts, invoices, distribution logs, vendor acknowledgements, and approvals. These basic record-keeping functions are critical to ensuring transparency and accountability, yet they were glaringly absent at the embassy.

One of the most concerning revelations in the report is the embassy’s purchase of gift items worth Rs7.28 million between fiscal years 2019 and 2022, which were acquired without following the prescribed procurement procedures. This violation is not only a clear breach of established financial regulations but also a demonstration of the embassy’s failure to maintain basic financial discipline when handling public funds. Furthermore, the Pakistan Community Welfare and Education Fund, which is meant to support overseas Pakistanis, was misappropriated for the payment of Rs2.97 million in honorariums to 198 security and janitorial staff hired by private firms. These payments were made in cash and without the necessary receipts or acknowledgements, a further breach of protocol that highlights the embassy’s lack of financial oversight.

Despite the foreign ministry being repeatedly urged to provide missing documents and justify these unauthorized payments, it failed to do so. When questioned, the foreign ministry defended the misuse of the funds, claiming that the payments were intended to support the well-being of low-paid workers. However, such justifications cannot absolve the embassy and the foreign ministry of responsibility for their failure to comply with procurement protocols and basic financial oversight.

The report also uncovers a pattern of similar misconduct across other diplomatic missions. For instance, the Pakistani embassy in Bangkok was found to have paid Rs4.1 million to a translation services firm without obtaining prior approval from the foreign ministry or the Law and Justice Division, again breaching established protocols. Similarly, the Institute of Religious Studies in Islamabad violated Treasury Single Account (TSA) rules by maintaining a welfare bank account holding over Rs3 million without prior approval from the Finance Division, rendering the account’s operation irregular and outside the bounds of financial regulation.

Another striking example of financial mismanagement is the failure of several embassies to claim VAT refunds from host governments, resulting in significant losses to the national exchequer. The AGP’s report indicates that the total amount of lost VAT refunds amounts to over Rs64 million, a substantial sum that could have been better utilised within Pakistan’s budget. Despite repeated warnings and admonitions from the authorities, no meaningful corrective action has been taken in response to these financial oversights.

These findings paint a picture of a systemic issue of incompetence and negligence within Pakistan’s diplomatic missions, where senior personnel, including ambassadors, have failed to ensure compliance with financial regulations. The failure to maintain records, approve expenditures, and manage funds responsibly highlights a glaring lack of accountability at the highest levels of the diplomatic service. This is not only a matter of financial irresponsibility but also a direct reflection of the lack of proper governance and oversight within the foreign ministry.

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It is particularly concerning that these mismanagement practices continue even as Pakistan faces an urgent need to curtail unnecessary government spending. The country’s economic crisis demands that all government departments, including diplomatic missions, operate with the utmost financial discipline and efficiency. Instead, these findings highlight how public funds are being squandered by individuals entrusted with the responsibility of managing them judiciously. This kind of fiscal negligence is detrimental not only to the country’s economic stability but also to its global reputation and standing in international diplomatic circles.

The failure of Pakistan’s diplomatic missions to properly manage their finances and adhere to basic administrative functions is a cause for serious concern. At a time when the country is struggling with high inflation, rising debt, and a looming economic crisis, such mismanagement only serves to exacerbate the situation. These financial irregularities further undermine the credibility of Pakistan’s foreign policy and diplomatic efforts, as the public begins to question the competence and integrity of those responsible for representing the country abroad.

The AGP’s findings should serve as a wake-up call for the government, particularly the foreign ministry, to take immediate and decisive action to address these financial mismanagement issues. There is an urgent need for a comprehensive review of the operations of Pakistan’s diplomatic missions to ensure that they comply with financial regulations and adhere to established procurement protocols. This includes holding senior diplomats and embassy staff accountable for their actions, ensuring that the relevant authorities are given the power to oversee financial expenditures, and implementing stricter oversight mechanisms to prevent future violations.

Furthermore, the government must take concrete steps to ensure that such breaches of financial protocol do not go unpunished. Holding individuals accountable for their actions is essential to restoring trust in Pakistan’s diplomatic and administrative institutions. It is also vital to reinforce the importance of transparency and financial integrity within Pakistan’s foreign missions, as these are fundamental principles that underpin effective governance and international relations.

In conclusion, the AGP’s audit report underscores the urgent need for reform within Pakistan’s diplomatic missions. The culture of financial mismanagement, disregard for basic rules, and failure to adhere to procurement protocols must be addressed if the country is to move towards a more responsible, efficient, and accountable system of governance. As Pakistan faces an increasingly precarious economic situation, the government must prioritize fiscal discipline, transparency, and accountability to safeguard public resources and promote responsible diplomacy on the global stage.

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