Irregularities in the financial management of the Ashuganj fertilizer plant project in Bangladesh

Audit report covers the period 2/75-6/79 and is based on document review, site visits, and discussions with appropriate officials. The prime contractor, Foster Wheeler Limited, failed to adequately monitor subcontractors" use of funds. As a result, about $3.5 million of A.I.D. funds were improperly spent. Cargo Export, the company contracted by Foster Wheeler for freight forwarding, spent $934,082 for transportation on ineligible foreign-flag air and sea carriers. Approximately $2,202,332 worth of commodities became ineligible for funding because they were shipped on foreign-flag carriers by Cargo Export and another freight forwarder, the Foster Wheeler Energy Corporation. In addition, Cargo Export was paid $294,774 for delivery and handling services which were not provided and $30,230 for shipping costs which it did not pay. In regard to project commodities, Foster Wheeler did not adequately review billings, resulting in $28,212 in overpayments to four suppliers. Because it would be impractical to have the GOB resolve the complex problems revealed by the audit, it is recommended that AID obtain an assignment of claim from the GOB for ineligible expenditures and act on the GOB"s behalf in recovering from Foster Wheeler the maximum amounts possible.