"USAID terminated a $150 million development agreement in Pakistan after evidence of procurement fraud had been uncovered." — File Photo

WASHINGTON: The United States has suspended a US-based aid organization from receiving new development contracts as it investigates reports of fraud and other misconduct in development projects in Pakistan, the US Agency for International Development said.

The Office of Inspector General at the US Agency for International Development has said in a report to Congress that USAID terminated a $150 million development agreement in Pakistan after evidence of procurement fraud had been uncovered.

In a statement on its website on Wednesday, USAID said it had suspended the Academy for Educational Development during an inspector general investigation.

“Initial findings by USAID's OIG reveal evidence of serious corporate misconduct, mismanagement, and a lack of internal controls, and raise serious concerns of corporate integrity,”

USAID said. It did not give any further details about the Academy for Educational Development project.

In a statement on its website, the Academy for Educational Development, based in Washington, said it was being investigated by USAID for the Pakistan project and for another project in Afghanistan.

“AED has made significant steps toward strengthening its project-oversight processes, personnel and resources,” the group said.

Lars Anderson, a spokesman for USAID, said on Thursday the group has USAID contracts worth $640 million globally in areas including governance and health. He said those contracts will continue for the time being.

“USAID is conducting a review of every program associated with AED and the review will determine the next steps forward,” Anderson said.