Shahjalal Airport: 'Irregularities' of Tk 45 billion found in Tk 210 billion project

A series of financial irregularities totaling over BDT 44 billion (Tk 4,400 crore) have been uncovered in the third terminal project of Hazrat Shahjalal International Airport, according to government audits.

The Office of the Comptroller and Auditor General (CAG) has estimated a total financial loss of nearly 45 billion (Tk 4,469 crore 9 lakh 31 thousand 766) across various sectors, including payments made beyond contractual terms, additional bills approved without authorisation and failure to recover compensation from contractors despite delays in project completion.

This BDT 213 billion project is one of the largest infrastructure projects in the country. Of the total cost, 50 billion from Bangladesh's own resources. The remaining amount is financed by Japan International Cooperation Agency (JICA). Aviation Dhaka Consortium (ADC) is implementing the construction work of the third terminal.

The project was launched on 28 December 2019 during the tenure of the now-banned Awami League government.

The third terminal, spanning an area of 542,000 square meters, has a floor space of 230,000 square meters. It features 177 check-in counters, 64 departure immigration desks and 64 arrival immigration desks.

According to the CAG audit report, violations of contractual conditions, unauthorised expenditures and unjustified financial benefits to contractors occurred at various stages of project implementation. The report identified irregularities and corruption-related issues in 27 areas.

Civil Aviation and Tourism Minister Afroza Khanam said the allegations related to the third terminal project’s expenses had come to the government’s attention. She told Prothom Alo that the allegations concern projects undertaken and implemented during the previous government’s tenure.

The minister stated that the current government has been following a zero-tolerance policy against irregularities, waste and corruption since taking office. As part of that effort, the allegations regarding the third terminal project’s expenses are being reviewed with the highest priority. She added that initiatives have been taken to collect and analyse audit reports related to the project.

The CAG audit report stated that the contractor was paid additional funds through variations approved by consultants without the authorisation of the proper authorities. This led to an irregular expenditure of nearly Tk 20 billion. In this instance, international contract protocols were not followed and the approval limits were exceeded.

The report noted that additional payments were made to the contractor beyond the contract terms and calculating costs based on higher-than-proposed weight estimates. This caused a financial loss of around Tk 1.22 billion to the government.

Furthermore, the report mentioned that the decision to construct concrete ducts instead of ceramic ones increased the contract price. Despite no actual savings being made, additional bills were paid to the contractor under the ‘value engineering’ sector by showing fictitious savings

The audit report estimated that the government incurred a financial loss of Tk 702.588 million in this sector.

The report also highlighted major irregularities in soil removal work within the project area. According to the contract, the soil was supposed to be dumped 6.5 kilometers away but it was dumped within two kilometers instead. However, bills were prepared based on transportation costs for the full 6.5 kilometre distance. Expenditure under this sector was shown as Tk 830 million. According to the audit findings, this irregularity caused a financial loss of approximately BDT 520 million.

The audit data reveals that in many cases, payments were made without necessary administrative approvals. The report pointed out weaknesses in the project authority's ability to properly verify the contractor's claims, determine the justification of expenses and enforce contractual conditions.

The report further said that effective checks and balances could not be ensured as the development partner, consultants, and contractors were all from the same country.

The report stated that, in violation of contract terms, an additional Tk 7.15 million was paid for the airfare bills of the project's consultants.

Beyond the contract, payments for the consultants' car rentals were made to both the contractor and the consulting firm. This resulted in a financial loss of Tk 116.08 million to the project.

Bills were also paid for certain consultants who were not named in the contract agreement. The honorarium for these consultants caused a financial loss of Tk 390.89 million to the project.

The contract specified the countries of origin, brands and manufacturers for various products to be purchased under the project. However, violating the contract terms, products were imported from China and India instead of Italy, Singapore, Thailand and South Korea.

Additionally, Tk 12.63 million was paid in unauthorised bills for the construction of the basement floor and waterproofing of the third terminal building, causing a financial loss of government funds.

One of the major objections raised in the audit report concerns the arrangement of the soft opening or partial inauguration of the third terminal project. Although there was no provision for such expenditure in the Development Project Proposal (DPP) or the contract, Tk 442.36 million was paid to the contractor.

While funds were allocated for event management, additional manpower and other sectors, no sufficient evidence was found regarding the necessity or justification for these expenses.

It further said that according to the contract, compensation was supposed to be recovered from the contractor if the work was not completed within the stipulated time. However, the provision was not enforced in the project. This resulted in a potential financial loss of over Tk 15 billion to the government.

The report also noted that contractual conditions were not fully followed while issuing the Taking Over Certificate. It said the government incurred a financial loss of Tk 2.177 billion by providing unethical benefits to the contractor under ‘catch-up costs’ and ‘move forward costs’, which were outside the contract.

According to the audit observations, the project was not completed within the scheduled timeframe. Despite this, payments were made on the grounds that the work had been completed ahead of schedule.

A total of Tk 34.71 million was paid for 580 trees in the project, including 84 large and 496 small and medium-sized trees. Based on that, the average price of each tree stands at Tk 59,851.

However, similar saplings are sold for a maximum of Tk 500 in nurseries near the airport. This means the bill for the trees was submitted at a rate approximately 120 times higher than the market price.

The audit report also said full payments were made despite suppliers failing to provide trees of the required height.

Several project works were carried out through subcontractors, but the main contractor was billed after adding an additional 10 to 25.8 per cent to their proposed prices. This resulted in an additional expenditure of Tk 479.50 million for the government.

The audit report mentioned that complete documents related to sub-contractor appointment contracts and bills were not provided during the audit.

Besides, although income tax was added to variation bills and paid, the money was not deposited into the government treasury, causing a loss of Tk 42.94 million. Furthermore, Tk 82.20 million was overpaid by not following the contract terms for price adjustment calculations.

In the 2023–24 fiscal year, Tk 22.46 million was given to the contractor for COVID-19 prevention, despite there being no outbreak of the virus in the country at that time. The audit report termed the expenditure as beyond the scope of the contract, causing financial loss to the project.

The audit report said the project relied excessively on recommendations from the consulting firm in making various decisions. Necessary administrative approvals were not obtained. It also pointed out weaknesses on the part of the project authority in properly verifying contractors’ claims, examining the justification of expenditures and enforcing contractual conditions.

The report further said effective checks and balances could not be ensured as the development partner, consultants, and contractor were all from the same country. This created a risk of conflicts of interest.

The audit department recommended recovering the disputed funds from the concerned individuals, taking legal action where necessary, ensuring the deposit of dues into the government treasury and taking action against the officials, consultants and contractors involved in negligence of duty.

Additionally, the report emphasised strictly following contract terms in similar future projects, ensuring transparency in approving variations and conducting proper verification before making payments.

Iftekharuzzaman, Executive Director of Transparency International Bangladesh (TIB), told Prothom Alo, "Mega projects mean mega corruption. There has been major corruption in the Rooppur Nuclear Power Plant as well.”

“The audit report now shows significant corruption in the construction of the airport's third terminal. Following an investigation, action must be taken against those involved in this corruption, which occurred during the tenure of the previous government," he said.

Referring to the Japanese contractor involved in the project, the TIB executive director said, “It should also be investigated whether any Japanese company had involvement or responsibility in the corruption.”

Civil Aviation and Tourism Minister Afroza Khanam said exemplary action would be taken against responsible individuals or organisations according to existing laws.

“No one is above the law. Ensuring accountability for every penny of public money is a commitment of the current government. We are determined to establish transparency, accountability and good governance,” she said.