Bribe claims send Leighton into slump

Fraud and bribery claims against Leighton Holdings have sent shares in the construction giant falling by more than 10 per cent, its biggest one-day loss in more than two years, as former chief executive Wal King denied all allegations of wrongdoing.

Leighton said on Thursday it was "deeply concerned" about claims raised in a Fairfax Media investigation of plans to pay multimillion-dollar kickbacks in Iraq, Indonesia, Malaysia and other countries, as well as other serious corporate misconduct.

It denied having a culture of corruption and cover-ups, describing the cases as "exceptional instances" and adding it was not aware of any new allegations or instances of ethics breaches.

Leighton shares closed 10.4 per cent lower to $17.54, the biggest daily slide since April 2011. The slump wiped $688 million off Leighton's market capitalisation.

Shares in Germany's largest construction company, Hochtief, which owns 56 per cent of Leighton, fell 7.9 per cent in Frankfurt trading - its biggest drop in almost two years - following the report.

The investigation said confidential company documents alleged Mr King was aware of a kickback linked to an Iraqi contract. Mr King, who retired as chief executive in 2010, said in a statement that he "emphatically denies" all allegations of wrongdoing made against him. "Mr King intends to take all steps which may be necessary to protect and vindicate his reputation," the statement said.

Leighton said in a statement to the ASX it had voluntarily reported to the Australian Federal Police in 2011 a possible breach of its code of ethics after accusations of bribery payments in Iraq.

It said it was continuing to work with the AFP on the investigation.

The AFP said on Thursday it was treating the case as a priority.

Leighton added fraud allegations in relation to a barge construction in Indonesia were internally investigated and resulted in the company taking a former employee to the NSW Supreme Court to recover $5.6 million. It said the case was still before the court.

Leighton said its board acted in the best interests of its companies and its board members were "aware of their responsibilities and have at all times executed their duties with the appropriate care and diligence".

The contractor said that since it discovered a possible breach of its code of ethics in 2011, it initiated an internal review that led to the sacking of a senior executive the following year, an overhaul of its management structure and improved corporate governance and risk management processes.

Leighton has recently enjoyed a share price resurgence, following a series of new projects worth up to $6 billion in recent months. Shares rose as high as $24.29 in February, after the company recorded a full-year profit of $450 million following a net loss of $285.5 million in the previous reporting year.

The company has been working hard to shake off previous woes, including turmoil on its board of directors earlier this year, when then chairman Stephen Johns and two other independent directors resigned following differences with major shareholder Hochtief.

The firm was also hit by profit downgrades after cost blowouts on Brisbane's Airport Link and the Victorian desalination plant.

"It's not something that Leighton would welcome," Morningstar analyst Ross MacMillan said about the allegations.

"We are certainly reassured by the processes that [CEO] Hamish Tyrwhitt has introduced, and also the fact that a number of these allegations have been investigated by the company. But we'd like to see Leighton address any issues that were raised in the newspaper articles as soon as possible and potentially clear up any allegations."