Investigating fraud and corruption in Bangladesh

In this second installment in our series on fraud examinations around the world, an anonymous complaint from an employee sparked an in-depth investigation into allegations of corruption in the bidding process for a large-scale infrastructure project in Bangladesh. The author recounts the intricacies of the case and provides invaluable insight into conducting fraud examinations in this developing country.

Like so many fraud examinations, the subject of this case study began with an anonymous tip. The consulting firm that I was working for received an urgent request from the compliance team of a multinational financial institution known for its robust compliance framework. The financial institution was financing an infrastructure initiative in Bangladesh. An anonymous complaint had alerted the multinational company to anomalies in the bids received in response to a tender offer issued for the project.

Doing business in Bangladesh can be quite complicated. The eighth most populous country might be renowned for the world’s longest natural beach, its Bengal tigers, and many archeological and historical sites, but it also has a reputation for corruption that can stymie business development. The South Asian nation ranked 151 out of 180 countries in 2024 on the Corruption Perceptions Index (CPI), the leading global indicator of public-sector corruption. Bangladesh scored 23, with a slight change of -1 since 2023. A country’s CPI score is the perceived level of public-sector corruption on a scale of 0-100, where 0 is highly corrupt and 100 means very clean. Bangladesh is closer to the highly corrupt side of the scale than it is to very clean side.

But the nation’s purported corruption isn’t unique to the region. According to Occupational Fraud 2024: A Report to the Nations, Southern Asia had the highest percentage (74%) of corruption cases out of all regions studied in the report.

In a 2022 survey conducted by the Centre for Policy Dialogue in partnership with the World Economic Forum, respondents said that the primary obstacle to conducting business in Bangladesh is corruption. Respondents specifically cited bribery for tax payments, licenses and utilities as ongoing challenges. According to the CPI, 24% of public-service users surveyed in 2020 indicated that they had paid a bribe during the previous 12 months. And 72% of those surveyed during the same time frame said that government corruption is a significant problem.

Despite a growing economy, Bangladesh has wrestled with government instability. Most recently, student protests over civil service job quotas have led to unrest in the country as demonstrations turned violent, and the government responded by shutting down the internet and imposing a curfew on citizens. As you’ll see later in this article, the investigation team had to grapple with this curfew.

Amid these protests was the resignation of the Sheikh Hasina government in August 2024. Hasina, the former prime minister, fled the country to India. Hasina’s opponents instated an interim government headed by Nobel Peace Prize-winner Muhammad Yunus, which has promised to ensure accountability, uphold citizens’ rights and hold credible elections. The interim government has even launched a $5 billion corruption investigation into Hasina and her family, focusing on alleged embezzlement related to the Russian-backed Rooppur nuclear power plant. The probe targets Hasina’s son, Sajeeb Wazed Joy, and her niece, British lawmaker Tulip Siddiq. The investigation follows allegations raised by political opponent Bobby Hajjaj and centers on claims of money laundering, kickbacks and mismanagement, particularly in the construction of the plant funded by a Russian loan. The corruption claims also extend to theft from a government housing program.

Knowing the realities of doing business in Bangladesh made the anomalies in the bids a source of immense concern for our client. The investigation team’s review of the tender offer documents didn’t reveal anything questionable. However, a close review of the data from the bid submissions showed subtle similarities in six of the bids, including specific phrasing, unique formatting and structural details that mirrored internal evaluation criteria. We formed an investigation team, operating under a mandate to analyze whether the tendering process had been compromised.

In the November/December 2024 issue of Fraud Magazine, I recounted the intricacies of investigating workplace misconduct in India. In this article, I’ll detail how conducting a fraud examination in a country with civil unrest requires diligence, adaptability and a concern for examiners’ personal safety. This case serves as an example of how corruption within one company threatened to derail an important infrastructure project for an entire developing country. With a substantial loan investment on the line, a compromised tender process not only jeopardized the multinational financial institution’s reputation but also placed those charged with exposing the fraud in danger.

Investigating corruption

Given the complexity of the case, investigators adopted a phased approach to allow greater control over the scope and direction of the inquiries and costs. The investigation began with online public records research specifically related to corporate filings. Records in English and Bengali revealed that the companies had no public profile, which isn’t unusual in a developing country. In addition, a meticulous review of procurement documentation, including bid submissions, evaluation reports and contracts served as the foundation of the research phase. Corporate records aren’t always readily available or up to date in Bangladesh. Although we were able to obtain the corporate records, they didn’t provide much information beyond the companies’ addresses, directors’ and shareholders’ names, and skeletal financial records. The bidding companies had a limited online footprint, making it difficult to ascertain their operational capabilities. Based on the limited information from open sources, the companies involved in the bidding process seemed independent and above board. However, one company, which I’ll refer to as Company X, stood out. [See “Corporations in Bangladesh” at the end of this article.]

Company X had won several high-value government projects in the previous five years. Although the evidence didn’t directly tie Company X to malfeasance in the current project, it painted a picture of a company well-versed in maneuvering through Bangladesh’s complex political and business landscape. Armed with this background research, one team of investigators went to Bangladesh, and another team directed the investigation from India. A team on the ground helped the field team navigate the cultural and logistical nuances of the investigation in Bangladesh. Local assistance is necessary for fraud examiners who are unfamiliar with Bangladesh and who don’t speak Bengali. A local team can help navigate crowded areas and transportation systems. In addition, fraud examiners should be aware of pickpocketing and other petty crimes that tend to be situational and concentrated in impoverished areas.

When the team first arrived in Bangladesh’s capital city, Dhaka, it visited the addresses identified in the corporate records to assess the real scale and size of the six companies. Visits to the company addresses were scheduled with instructions that the investigators would make inquiries about the companies. As it turned out, five of the six companies were in two different areas: Gulshan and Banani. Nestled between India and Myanmar on the Bay of Bengal, Bangladesh spans 56,977 square miles. Banani, located west of Gulshan, is close to diplomatic zones in Dhaka, including affluent residential accommodations, world-class hospitals, international schools and clubs. To our surprise, the five companies’ addresses resembled residential accommodations, making discretion imperative while making inquiries. Looking into companies in a commercial setting likely wouldn’t raise eyebrows and can be easily managed. But fraud examiners must be discreet when visiting a company that’s headquartered in a residence.

The team’s inquiries revealed limited presence of the companies in Dhaka, as most of the teams operated out of project offices in Tangail, a central region of Bangladesh approximately 60 miles from Dhaka. Tangail was where the infrastructure project in question was located. Documenting whatever information they could gather about the companies, the team began planning logistics to travel to Tangail.

The team hired a vehicle with a driver to make the five-hour journey to Tangail. Once again, the local investigators began their visits to the companies’ listed offices, although they weren’t fully operational and had limited staff. Through local experts, the team secured interviews with people familiar with the project. Among them was a retired construction expert who spoke cautiously but candidly, stating, “Tender processes here are often like a stage play. The decisions are made before the actors even audition.” Another contractor unaffiliated with the project shared his frustrations that winning a bid without greasing the wheels (bribery) was impossible. These insights, while damning, were general in nature.

The team then interviewed the infrastructure project team members on the ground. During one of the interviews, a young project supervisor seemed exceptionally nervous, sweating profusely and losing his breath. The investigator informed him of his employer’s non-retaliation policy and his responsibility to report any concerns about the project. Eventually, he revealed that these firms were closely linked through familial ties or shared business relationships. He confessed to accepting small bribes for project details. He supported his admission by sharing his financial records with investigators. Bank statements revealed that the employee had received several unexplained deposits during the tender process. Though small in sum, the deposits were significant, considering the employee’s modest salary.

He initially assumed that the small deposits were a gesture of gratitude to assist the companies in getting the bid for the development. However, when a bidder from Company X asked him to share details of the internal evaluation (an analysis of bids submitted by various companies in response to a tender process that’s used to determine the most qualified bidder to be awarded the contract), the employee refused until he received threats that his career would be ruined and his family would suffer. The young supervisor explained that he felt trapped and helpless; he decided to lodge an anonymous complaint.

When the team members asked him why he didn’t escalate the matter to leadership, he said that the project director seemed friendly with Company X and that he didn’t know whom to trust. He warned the team of the strong political connections of the main player, Company X, the same company that our research had identified. The young man provided both the names of individuals he’d interacted with who were low-level employees in Company X and the details of Company X’s owner.

Security concerns during the investigation

Once they’d gathered as much information from the employee as possible, the investigators returned to the hotel to debrief the team in India. On the way back to the hotel, team members thought they were being followed but didn’t pay heed until research into Company X’s employees (conducted while traveling to the hotel) revealed criminal records of intimidation and murder. With that revelation, the team members feared for their safety, and I instructed them to leave immediately without interviewing the project director. They decided to defer the interview until the team was brought to safety.

The team encountered another major roadblock: a curfew in Dhaka due to earlier student protests. The government had instated the curfew to prohibit free movement of people in an attempt to curtail the demonstrations.

With the ongoing curfew, the investigators wouldn’t be able to enter Dhaka. With the heightened security concern, it became increasingly urgent to move locations. While exploring whether to change hotels, move closer to Dhaka or request assistance from the police, the hotel receptionist suggested that the team travel to Dhaka in an ambulance and offered to arrange for the team to travel in an emergency vehicle for a fee. After weighing the ethical considerations of this plan, the most senior member of the investigation team decided this was the best plan to safely leave Tangail. One investigator pretended to be a patient, and the team started its journey back to Dhaka in the ambulance. Four hours later the team reported that it successfully reached its hotel in Dhaka.

The team interviewed the project director remotely. In the interview, the investigators meticulously pored over each tender document and bid submission with him. However, the project director claimed that he wasn’t able to see any anomalies, and anything he couldn’t explain he attributed to the companies’ past experiences and general knowledge of working on infrastructure projects. He denied any link to Company X or its owners. We decided to keep this interview at a high level to protect the supervisor’s identity.

Results of the investigation

Our investigation culminated with a comprehensive report for the financial institution detailing how the tender process had been compromised. Confidential information leaked by the supervisor who’d been threatened gave certain bidders an undue advantage. The investigation team provided a factual account of the supervisor’s admission and his cooperation in the investigation. The financial institution also received the transcript of the project director’s interview. The report highlighted the aggressive tactics, including threats of dire consequences that helped obtain confidential information. The investigation team recommended that the financial institution enhance its scrutiny of future tender documents and provide mandatory training of local project staff to implement a whistleblower hotline. Recognizing the broader implications, the client suspended the project and initiated an internal inquiry into the role of the project director.

The financial institution ultimately requested that the local company — representing the consortium of investors — investigate the project director without disclosing the name or confession of the young supervisor. [See “What to know when investigating fraud in Bangladesh” at the end of this article.]

Lessons learned

The Tangail chapter of the investigation provided a stark reminder of the challenges inherent in combating corruption in environments where power is wielded informally and accountability is scarce. In Bangladesh, influence is often primarily exerted through a combination of political power, family connections, economic clout and social standing within local communities. The investigation team’s time in Tangail underscored the resilience required to navigate threats, hostility and entrenched networks of complicity.

Prioritizing an investigative team’s security is essential to ensuring the integrity and success of the inquiry, especially in jurisdictions where there’s political upheaval and corruption. These matters can challenge the independence, confidentiality and physical safety of investigators. A team equipped with proper security and safety precautions is better able to handle these difficulties without being unduly influenced, and thus better able to conclude a fair and accurate report. Putting security first also helps the team become resilient and trusting, which allows them to concentrate on finding the truth without worrying about compromise or reprisals. Ignoring security could put the investigation at risk and expose the client organization to serious operational, legal and reputational consequences.

Radhika Vohra, CFE, is a former executive director for Wells Fargo’s conduct management practice in India and the Philippines and is a former senior manager of Microsoft’s business conduct investigations team. Contact her at radhikavohra2013@gmail.com.

Corporations in Bangladesh

When investigating a case of fraud in Bangladesh, it’s important to understand corporate governance and structure in the country. Identifying those at the helm of the company and creating a financial profile of the company assist in conducting a successful examination.

Companies must register with the Registrar of Joint Stock Companies and Firms (RJSC). The Companies Act, 1994 requires a minimum of two shareholders to establish a private limited company. A sole proprietor or a one-person company is exempt from RJSC registration. Investigators looking into a registered company based in Bangladesh will need to review two key documents: the memorandum and the article of association. The memorandum of the company should state the primary business objectives, the amount of paid-up and authorized capital, and the list of the shareholders and their respective shareholdings. The articles of association should include the number of directors, power of the board, power of the managing director, meeting process, quorum, notice procedure, appointment of auditors, etc. A private limited company should have a minimum of two directors. A public limited company should have at least three directors.

What to know when investigating fraud in Bangladesh

If you’re conducting a fraud examination in Bangladesh that involves employees of an organization, it’s imperative to understand the country’s laws related to due process to ensure that the case holds up in court.

Any complaint against an employee (hereafter called the subject) must be made in writing to the authorized officer or department within the company. When a complaint is made, the relevant authority (usually the human resources department or the labor officer) must give the subject notice of the allegations and allow the subject at least seven days for submission of written explanation. Upon receipt of a satisfactory written explanation from the subject, the complaint will be considered settled and shouldn’t affect the subject’s future employment.

However, if the relevant authority finds the subject’s written explanation lacking, the employer must form an “inquiry committee” to address concerns of alleged misconduct. The inquiry committee must investigate the alleged wrongdoing and provide the findings to the employer. The committee also proposes any necessary disciplinary action. The inquiry committee may consist of no more than six members. The employer may nominate inquiry committee representatives from within the organization. Similarly, the subject of the investigation may nominate representatives from employees of the organization.

The witnesses, either from the subject or from the employer’s side, are thoroughly interviewed (a process called examination) and cross-examined by the inquiry committee and by the subject. The witness statements must be recorded and signed.

The subject receives all the evidence collected against them. Once the findings are completed, the inquiry committee must submit the findings of the investigation to the employer and the recommended disciplinary action within 60 days from the date the committee formed. If the committee recommends dismissal of the subject, the subject is given an additional opportunity to provide a statement. If the additional information from the subject is unsatisfactory, the employer can terminate the subject’s employment. If the subject doesn’t agree with the dismissal, they may file a complaint with the employer within 30 days of the date of termination. If the employer doesn’t respond or if the subject is dissatisfied with the result, they may file a case in the labor court.