The Public Accounts Committee (PAC) has delivered a scathing indictment of the Ministry of External Affairs (MEA) over serious financial and procedural irregularities at the Indian High Commission in London, warning of systemic governance failures and accusing the Ministry of shielding culpable officials.

In its 26th Report tabled before the 18th Lok Sabha on July 29, 2025, the PAC (2025–26) laid bare a pattern of “grossly irregular and manipulated” transactions surrounding compensation receipts and renovation work at India House in London, raising red flags about accountability, oversight, and transparency within India’s diplomatic missions.

The Committee’s findings, which also assess the government’s response to its earlier 87th Report (17th Lok Sabha), paint a troubling picture of financial mismanagement and procedural violations by the London Mission — and of what it calls a “feeble and evasive” response from the MEA.

Unauthorized funds, manipulated tenders

Two major breaches anchor the Committee’s concerns.

First, the High Commission irregularly permitted a private entity to receive and retain government receipts amounting to GBP 90,000 (about Rs 78.41 lakh) in a private bank account. These funds, meant for the Government of India, were instead used to settle routine Mission expenses — an act the PAC described as a flagrant violation of financial propriety and governmental norms.

Second, the report exposes a deeply compromised renovation project at India House’s basement, undertaken without prior MEA approval. The renovation, costing GBP 744,971 (around Rs 6.63 crore), was awarded to an ineligible firm via a manipulated tendering process. Additional work was later handed out to the same firm — and to an associated company that was hastily incorporated just before the award and dissolved shortly after receiving payments. The PAC characterized these actions as having conferred “undue benefits” on the contractors involved, facilitated by fraudulent documentation and potential collusion.

MEA’s ‘no mala fide’ stance draws sharp rebuke

Despite the documented violations, the MEA maintained that “no mala fide intent could be established with evidence,” and opted for disciplinary proceedings rather than pursuing legal or criminal action. The PAC sharply rejected this conclusion, terming the Ministry’s approach “indefensibly lenient” considering the “open violation of rules and processes” and “possible collusion between Mission officials and private agencies.”

Calling the Ministry’s response an attempt to “protect delinquent officers,” the Committee reiterated its demand for criminal proceedings against those responsible, stating that the integrity of public institutions was at stake.

Structural audit lapses expose systemic weaknesses

The report also takes aim at the MEA’s internal audit framework, identifying it as a key enabler of the misconduct. Despite repeated calls over the years to strengthen audit practices at Missions abroad, the Ministry failed to detect the London irregularities on its own — discovering them only after external audit intervention.

This, the PAC said, pointed to a broader “widespread prevalence of such irregularities in almost all Missions” and reflected a “deplorable state of affairs” in MEA’s financial monitoring apparatus. The Committee urged an urgent revamp of the internal audit mechanism, including a widened mandate to cover transaction- and compliance-based audits, and implementation of strict deadlines for action on audit findings.

Delay in oversight reforms fuels PAC frustration

The Committee further expressed its frustration over the MEA’s sluggish progress in implementing promised reforms — notably, an online dashboard to track construction and renovation projects, and the creation of a dedicated Project Management Unit (PMU). While these reforms were proposed as a systemic response to prevent similar lapses, the PAC noted that little had been achieved on the ground and demanded strict timelines for deployment.

Crucially, the PAC asked for the dashboard to include photographic documentation at various stages of each project, to create an auditable trail and curb opacity.

Special audit brushed aside

Perhaps the most trenchant criticism was reserved for the Ministry’s response to the PAC’s earlier recommendation for a special audit of Missions with a record of financial irregularities. Instead of initiating a focused probe, the MEA informed the Committee that the Principal Controller of Accounts had merely been instructed to carry out remote audits and test checks.

The PAC described this reply as “lackadaisical” and “dismissive,” taking serious exception to what it termed the Ministry’s casual approach to serious financial concerns. It renewed its demand for a full-fledged special audit of the High Commission in London, and similar scrutiny of other Missions that have drawn adverse audit attention in the past.

Political implications and governance fallout

The revelations come at a time when the government has been seeking to project India’s diplomatic presence as more streamlined, accountable, and infrastructure ready. However, the PAC’s findings threaten to undermine that narrative, suggesting deep-rooted governance flaws that extend beyond a single Mission.

The MEA has yet to issue a formal statement in response to the PAC’s latest report, but the political pressure to act is likely to mount in the coming days, with opposition parties expected to use the findings to question the government’s claims on bureaucratic reform and institutional accountability.

The 26th Report was adopted by the PAC under the chairmanship of Congress MP K.C. Venugopal at its sitting on June 17, 2025, and officially tabled in both houses of Parliament on July 29.

The broader implications of the report go beyond London — with the PAC effectively warning that unless the MEA overhauls its internal audit and oversight systems, more such irregularities may already be festering across India’s global diplomatic footprint.

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