Commonwealth Secretary-General Patricia Scotland is struggling to secure a second term.
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 toldThe Sydney Morning Herald and The Agethat 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 Secretariat is the main agency that supports the Commonwealth's 54 member states,co-ordinates diplomacy and policy,and organises the annual Commonwealth Heads of Government Meeting.
Australia is the third-largest contributor to the Commonwealth behind Britain and Canada,and its move to pull funding could galvanise support from smaller,poorer nations who will not want to lose much-needed funding for the sake of Baroness Scotland securing a second four-year term.
New Zealand has also suspended nearly $3 million in funding,but the Australian response is more serious because the government has actually withdrawn already pledged money rather than merely withholding it.
The reduction announced by DFAT will hit a"technical co-operation fund"directly administered by the Secretariat. The money will be spent on other"Commonwealth-related projects",the DFAT spokesman said.