Australia's auditor-general will investigate a contract worth nearly $US60 million awarded to a Papua New Guinea company for services on Manus Island.
It comes after the Sydney Morning Herald reported the politically connected NKW Holdings was suspected of inflating invoices to turn profits.
The Auditor-General, Grant Hehir, will investigate the Australian government contract NKW was given to feed and house refugees on Manus.
In a letter on Monday obtained by the Australian Financial Review, he said he would also investigate $US300 million in contracts awarded to another Manus island service providerPaladin.