The bridge collapsed later, the preliminary hearing took place earlier. Therefore, the correct answer should be D. However, there is a mistake in the non-underlined part "he WAS questioned." The questioning is simultaneous with the engineer's dishonesty and this part of the sentence should say " he HAD BEEN questioned."

Hi,
I think While asking "shouldn't past form be used in this sentence" you simply want to know whether simple past can be used here or not?

To choose between Past vs Past perfect ask question to yourself:
whether event occurred in past?
whether it is connected with later event?

If answer is yes then use past perfect.

Now come to your question:

"he was not honest" before he was questioned i.e. accident occurred due to the engineer's earlier dishonesty. (He did something in the past that occurred before something else in the past, thus past perfect should be used.)
No doubt answer is D

It would be better if sentence be "although it would be even better if sentence was "when he had been questioned"

ohkk thnx guys.. i didn't get the context in the first go. Got it now.