Islamabad — In what is becoming a mounting international concern, US President Donald Trump’s policy of aggressively cracking down on foreign aid misuse has once again come into sharp focus as revelations emerge regarding large-scale financial irregularities in USAID funding in Pakistan. According to senior officials and documents circulating among diplomatic circles, nearly $845 million worth of USAID-funded projects, spanning energy, education, economic development, and humanitarian assistance, were suspended across 39 projects following strong allegations of financial mismanagement and political interference.
Multiple sources confirm that Trump’s decision to freeze USAID disbursements to Pakistan was triggered by growing unease in Washington over how foreign funds were repurposed by certain international non-governmental organizations (INGOs), often without proper oversight, accountability, or compliance with diplomatic agreements. While the Trump administration’s focus was originally framed as a global aid reform initiative, Pakistan quickly became a major flashpoint.
One of the central pillars of the controversy is the alleged misconduct by two high-profile organizations, Campaign for Tobacco Free Kids (CTFK) and Vital Strategies (VS), both of which have faced formal inquiries by law enforcement departments working under Pakistan’s Federal Ministry of Interior. The Ministry, after months of background checks and assessments, termed both organizations illegal and stopped them from operating in Pakistan in February 2024, citing serious violations related to non registration in Pakistan’s Ministry of Interior.
According to Pakistan’s laws, it is mandatory for any INGO to get itself registered in the ministry of interior. Also annual audit of all accounts from interior ministry’s approved financial auditing firms along with details of funds disbursements in Pakistan are required to submit in the interior ministry. But both INGOs didn’t fulfilled these mandatory requirements. Also these INGOs used a covert mechanism of transfer of funds to local organization through a dummy financial firm Wasabi.
The source further added, “Campaign for Tobacco Free kids and Vital Strategy never disclosed their operational structures or financial flows in Pakistan.
Tobacco Control Cell(TCC) operating under Ministry of National Health Services, Regulations and Coordination is also one of the main beneficiary of funding from these INGOs. But interestingly TCC had never conducted audit of the funding received from these INGOs.
In 2024, the Pakistani NGO Human Development Foundation (HDF) was exposed for having secret ties with the local tobacco industry, receiving funding from the tobacco industry. Interestingly, at the same time, HDF was also receiving heavy financial support from these INGOs.
According to articles and guidelines of WHO’s Frame Work Convention on Tobacco Control (FCTC), anti-tobacco advocates, organizations, INGOs and NGOs are strictly stopped from coordinating with the tobacco industry and they cannot receive any sort of sponsorship, funding, support, assistance directly or indirectly from the tobacco industry in any form.
After becoming aware of the links between the local NGO and the tobacco industry, both INGOs did not take any action to halt their funding to the Human Development Foundation.
In 2024, India had also taken actions against Campaign For Tobacco-Free Kids and placed CFTK name under prior reference category (PRC) indicating that international donations in India will be vetted and approved by the authorities before being utilized.
The international implications of this scenario are now being dissected in both diplomatic and donor communities. “This is no longer just about misreporting or bad bookkeeping. These INGOs have failed transparency tests globally, and the situation in Pakistan has amplified the debate on aid weaponization and sovereignty erosion,” said a diplomat source based in Islamabad, speaking on condition of anonymity.
Back in Washington, Trump’s move to freeze USAID operations was described by White House aides as part of a broader effort to reevaluate how American taxpayers’ money was being used overseas. At the time, allegations surfaced that over $17 million in USAID funding had been misappropriated in Pakistan alone, though this figure remains under independent review. The scandal added to Trump’s narrative of “America First,” reinforcing his argument for increased scrutiny of U.S.-funded initiatives abroad.
“The warning signs were visible years ago, but donor governments often chose to look away because the organizations carried prestigious Western tags,” said another informed official from Pakistan’s aid regulatory framework. “Now, with billions halted and projects suspended, everyone is realizing that the misuse of aid is not theoretical; it has consequences.”
