By Waliur Rahman
BBC News, Dhaka
The World Bank says it has cancelled $1m in funding for three development projects in Bangladesh after it found evidence of corrupt bidding practices.
Bangladesh is the most corrupt country, a global watchdog says
The agency said the practices violated procurement norms agreed between the World Bank and the government.
A government spokesman said the allegations would be investigated.
Bangladesh has been named the world's most corrupt country five times in a row by the global corruption watchdog, Transparency International.
The World Bank said the three projects were aimed at improving health, nutrition and municipal services.
It said inappropriate and collusive bidding practices had taken place in the contract signing process.
It believed bidders had colluded without the knowledge of the procurement agency to keep the contract price at an artificial level.
On one of the projects, investigators found a contract had been awarded to a supplier that did not exist.
"The World Bank's objective is to ensure that Bangladesh gets the best value for money while maintaining quality. Transparency and competition are the means to achieve the objectives and that's why we took this action," the World Bank's acting head in Bangladesh, Kaiser Khan, told the BBC.
The bank has asked the government to refund the cancelled amount and take appropriate action against those responsible for the practices.
The cancellation will embarrass the government at a time when Bangladesh has been ranked the world's most corrupt country for the fifth consecutive time by Berlin-based Transparency International.
Health Minister Khandaker Mosharraf Hossain said the World Bank allegations had never been raised with him but he would investigate.
"I think the allegations are a result of misunderstanding," he told the BBC.