Forged cash, business travel for family, and overstated allowances in Beijing embassy

Malta’s former ambassador to China Karl Xuereb was reimbursed for ‘fake money’ that two clerks at the Beijing embassy had received, but failed to verify using a machine provided, ending up with counterfeit Renmimbi.

The unspecified amount of ‘fake money reimbursement’, as pointed out in the 2009 annual report by the National Audit Office, was paid to the ambassador for forking out the money on behalf of the two clerks and an official.

But the Auditor General commented in his report that it could not be ascertained whether the “fake money episode was the only case.”

This is just one of the litany of administrative blunders detailed by the NAO in its review of Tonio Borg’s foreign ministry and its embassies abroad, whose €8.8 million budget overshot by another million in 2009.

The NAO report  goes further to reveal further shortcomings related to the Beijing embassy, when Karl Xuereb - who is today stationed in Berlin as ambassador to Germany - travelled “at least three times” with his entire family from Beijing and Malta in business class, against all established procedures.

In the three instances, reimbursement to the ambassador covered the purchase of air tickets that were “only supported by provisional reservation forms.”

In July 2009, a payment voucher covered a refund to the ambassador’s wife for air tickets for herself and her son. “Two provisional bookings were attached to the payment voucher, one indicated the price of €2,467 if booking was issued on June 30, 2009 while the other showed €5,668.51 if booking was issued on July 1.

“In actual fact, the higher price was refunded to the ambassador’s wife, but it could not be ascertained on which date the ticket was issued due to lack of evidence.”

The provisional bookings were not supported by an invoice, receipts or actual air tickets, so it could not be established whether the amount refunded reflected the actual amount paid.

More money was paid to cover three payment vouchers for Ambassador Xuereb between July and August 2008, as a charge on the change of date on return air tickets. Xuereb availed himself of a flight with a stopover in Brussels, incurring another expense of €1,908 on the air ticket.

“Both the ambassador and his spouse received subsistence allowance in connection with the one-night stop, with the NAO finding no evidence of ‘official business’.”

Despite the €9,513 paid out in air tickets, the ambassador was also refunded a further €13,000 on air travel, subsistence and contingency payments related to seven official visits undertaken during the same period.

Other amounts paid, also relating to the ambassador’s official travel amounted to €3,929.

Only four out of the seven official visits were covered by a formal programme or agenda supporting the visit, and due to the lack of documentation, it could not be ascertained that hotel expenses claimed and refunded to the ambassador were actually paid by him.

In all four visits, the subsistence allowance was found to be “overstated” while two other instances were not covered by any formal agenda, while €230 was paid to the ambassador as “contingency money” in connection with a visit to Japan. “In support of this payment, the ambassador provided a receipt covering a meal for two, notwithstanding that similar expenses are covered by the per diem subsistence allowance.”

Another payment of €3,504 for the ambassador’s ticket fare to attend the Malta-China Joint Commission in Malta was not backed by the flight ticket.

Shortcomings in foreign ministry

The Auditor General said the ministry had purchased €18,124 in Malta and EU flags from a supplier other than the one indicated in a contract for such purchasing. “It is unclear how this supplier was engaged since no quotations or direct order approval was made available for audit services,” the NAO said.

Some of the flags were also loaned to third parties who paid a deposit, but the cheques were never cashed. “These uncashed cheques could imply that flags were not at all returned to the ministry.”

A sample of €66,000 in some 100 transactions were also not supported by a VAT receipt, and none of the defaulters were even reported to the VAT Department. Even business with persistent defaulters in the quarterly VAT list was not discontinued.

The ministry also bypassed its own officer in charge of transport to book chauffeured cars for Malta airport transfers and local meetings during office hours. Transport vouchers for chauffeur-driven services failed to indicate the name of the person who used the services, or the destination, pick-up and drop-off, making it impossible to identify any cases of double payments. And a total of €1,022 was paid for the hire of a vehicle during July and August 2009, however no agreement supporting this payment could be traced at the ministry.

The NAO also lambasted the foreign ministry over the irregular procurement of goods and services. Audit testing revealed that two direct orders were issued for the printing of magazines on two occasions, for the total cost of €31,211.

“Quotations relating to this expenditure, as well as the original request forwarded to the Ministry of Finance for approval, were not made available for audit purposes. Furthermore, the practice to seek direct order approvals instead of issuing departmental tenders prevailed even during 2010, whereby Finance ministry approval was sought and obtained for the issue of 2,000 copies of another magazine, at a total cost of €20,291.19.”

The NAO said it paid €18,172 in 2009 and a further €3,304 in 2010 or for “media monitoring and reporting services” when no departmental tender was issued. While the ministry stressed that the “service was urgently needed”, no approval was sought from the finance ministry.

The Auditor General criticized the ministry’s choice of placing a direct order with a hotel hosting the Honorary Consuls Meeting, which cost the ministry €14,157, while another €7,800 in another direct order were paid to the hotel that hosted the Ambassador’s New Year’s greetings lunch. “Further assurances cannot be obtained that the most favourable offers were obtained for these purchases,” the Auditor General said.