Massive mishandling of funds has allegedly been detected in execution of the Shahjalal fertilizer-factory project with millions misspent from the public exchequer, insiders say.
A government audit agency has recently found financial irregularities involving Tk 1.098 billion in the project, according to the sources.
The project authority under Bangladesh Chemical Industries Corporation (BCIC) opened two accounts of fixed-deposit receipt (FDR) in a commercial bank with Tk 20 million taken out from the project allocations and did not show the profits and interest on the funds to the exchequer, the audit team found.
Also found out that the authority purchased office furniture in fiscal year (FY) 2015-16 although there was no provision in its development project proposal (DPP).
Furthermore, the selected contractors were paid bills without deducting VAT and income tax from them.
Besides, the project authority paid inflated bills beyond the contract price for land-development and upgradation works, the audit report says.
The state-owned BCIC also did not impose any liquidity damage (LD) on the contractors for their failures in timely work against the contract for the project.
Sources said although the contractors couldn't complete the construction works within their contract timeline, they were paid all the bills sans payment of the due VAT and taxes.
The office of Comptroller and Auditor General (CAG) of Bangladesh has elaborated on those anomalies in its latest audit report. The CAG office had submitted the report to the President which was then placed in parliament, too.
The FE obtained a copy of the report on the audit findings in the BCIC's Tk 48.74 billion Shahjalal Fertiliser Factory setting-up project at Fenchuganj in Sylhet.
With Chinese loan, the corporation set up the factory having the production capacity of 0.58 million metric tonnes of granular urea per annum.
The government borrowed US$560 million in supplier's credit from the Chinese government to set up the factory -- one of major development projects China is financing and helping in execution in Bangladesh, including the much-hyped Padma Multipurpose Bridge.
A Chinese contractor -- China National Complete Plant Import & Export Corporation (COMPLANT) -- was appointed to construct the fertiliser factory meant to build up on this country's capacity as Bangladesh has to import tonnes of fertilisers to cater huge demand from its agriculture sector.
The inventory of CAG findings shows that the project authority purchased office furniture and equipment at Tk 25.16 million from the project fund although there were no such provisions in the DPP.
The Project Director (PD) office had not deducted Tk 324.77 million imposable as IT and VAT from the bills of the contractor during FY2015-16 and had not deposited the money with the exchequer.
The PD opened Tk 200 million worth of FDR with BASIC Bank taking money from the project outlay and "misappropriated" the interest accrued to the FDR instead of depositing that with the public exchequer.
"The PD office had not imposed the liquidated damages (LD) on the contractors despite the failure in completing the contract works in time," it is stated in the audit report.
Bangladesh's supreme audit institution found 10 contractors having failed to complete the building construction in time where imposable LD was Tk 20.20 million.
Instead of imposing the LD, the project authority rather paid their bills without any penalty, the sources said.
Meanwhile, the PD office deducted 1.0 per cent as 'discount fund' worth Tk 1.34 million from the bills of at least 19 contractors for the welfare-fund formation, which is also "illegal", the audit reports says.
The PD office could not deduct funds from the bills of the contractors as discount, the project- insiders said.
The corporation took up the Shahjalal Fertiliser Factory installation project in 2012 for a total cost of Tk48.74 billion or $570 million.
Of the allocation, US$ 235 million was lent by the Chinese government as concessional loan, about US$325 million in preferential buyer's credit (PBC) came from the Exim Bank of China and Tk 8.88 billion from government's internal resources.
Md Omar Faruk, Managing Director of Shahjalal Fertiliser Company Limited, said he would not comment on the audit report.
"My Account Officer will talk to you today. I will tell my officer to talk with you on the audit objections," he told the FE correspondent.
When requested to comment instantly on the matter, Mr Faruk said, "I was not available during the period of audit and I would not comment anymore."
However, even after a week's wait, neither his accounts office nor any other responsible person did come up with their say.
Chairman of the Parliamentary Standing Committee on Public Accounts Dr Rustam Ali Farazi told the FE that they were scrutinising the CAG reports as those were placed before the parliament.
"Some of the audit- objection reports have already been discussed at our meeting. Among them, a few have already been detected as the problematic ones in terms of public fund use," he says. Mr Farazi says they sometimes recommend the Anti-Corruption Commission (ACC) for taking actions.
When asked about the actions, he said: "As per rules of procedure of the parliament we cannot go for awarding punishment for the corruption or misappropriation. But we can recommend the line ministry or the ACC for taking action."
Sometimes the parliamentary watchdog forms committee for further investigation into the objections. "If the committee finds those factual, then we recommend the ministry or ACC for taking actions," he adds.
Transparency International Bangladesh (TIB) Executive Director Dr Iftekharuzzaman says the audit reports proves that corruption in Bangladesh has expanded a lot.
"A section of dishonest public servants and businessmen (contractors) are creating some illegal opportunities of making money from the state coffer. And this trend has been established in the recent years, which is destructive for the country," he adds.
He believes audit reports are usually not discussed at the parliament properly. "The Public Accounts Committee does not function properly, too." So, the international anti-graft agency's Bangladesh-chapter chief concludes, "misappropriation and anomalies in utilising public funds are going on". Mr Iftekharuzzaman hails the CAG office for discovering what looks like the latter-day Ali Baba's cave.
