The Bangladeshi government has launched an investigation into the "misuse" of $1.6m (�1m) to find a strategic foreign partner for a 49% stake in the privatisation of Biman Bangladesh Airlines.

State Minister for Civil Aviation and Tourism, Mir Mohammad Nasiruddin said he found gross irregularities were committed by his predecessor.

"Out of $2m given for all necessary work for privatising the Biman Bangladesh Airlines, I've found gross irregularities in spending $1.6m," the minister was quoted as saying by the local press.

"I haven't found anything except a few vouchers... I've already sent all relevant papers to the Bureau of Anti-corruption to look into the matter," he said.

Over 115 staff have been fired or disciplined in the last year for corruption or irregularities, he added.

A spokesman for Biman told BBC News Online the company could not comment on the allegations.

Airline sell-off

The government has been trying to restructure Biman for privatisation by changing flight schedules, cutting overseas staff and improving passenger service, the minister said.

"There was a gross mismanagement in Biman that turned the organisation into a non-profitable one over the years and I'm trying to streamline the state enterprise," he said.

The closure or sale of state-owned enterprises has been a pre-condition set by the International Monetary Fund for further aid.

But the minister went on to say Biman had a record financial year, carrying 1.5 million passengers from July 2001 to June 2002 but made a 200m taka (�2.1m) loss for the year.

Biman carries about taka 550m in debt, including about taka 400m owed to Bangladesh Petroleum Corporation which last week threatened to halt aviation fuel supplies.

The minister also announced the airline would replace its five aging DC-10-30s with Boeing 777s.