Leighton Holdings rejected claims of impropriety amid allegations that its staff were aware of multimillion-dollar kickbacks paid to Iraqi officials.
Even so the construction company is facing a shareholder class action seeking to recover some of the losses as almost $1 billion was wiped off its market capitalisation last week.
It comes after a Fairfax Media investigation revealed a handwritten note by former managing director David Stewart that suggests he and former chief executive Wal King knew of a $42 million kickback paid to Iraqi officials to secure a $750 million oil pipeline project.
Fairfax Media also published a preliminary tender document that showed the signature of former Leighton senior executive David Savage that included an alleged kickback to win a lucrative project in Iraq.
High-profile lawyer Mark Elliott lodged a writ on behalf of shareholders in the Victorian Supreme Court. Mr Elliott, a Leighton shareholder, said the company should have been more upfront about the extent of the allegations, being investigated by the Australian Federal Police.
Leighton group secretary Vanessa Rees attacked the media coverage in The Age, The Sydney Morning Herald and The Australian Financial Review, saying in a statement it was important that media reports about the AFP investigation were "fair and balanced".
"Leighton does not propose to correct all of the inaccuracies contained in a number of media articles," Ms Rees said, but was not specific. She said it was not appropriate for Leighton "to descend to debate over matters of errors" when those matters were subject to court processes.
The statement said Leighton's board and management "condemn any form of corrupt or fraudulent behaviour".
"When the Leighton board became aware of David Stewart's handwritten file note it referred the matter to the AFP and has been co-operating with the AFP since that time."
In regards to the class action, Ms Rees dismissed the claims by Mr Elliott, who said he lodged the writ on behalf of more than 10,000 shareholders. "The company denies there is a proper basis for the alleged claim and will vigorously defend this class action," the Leighton statement said.
The writ also alleges that Leighton failed to notify the market about misbehaviour involving senior officers responsible for "important aspects" of its business in Indonesia, which the company investigated internally and has begun action in the NSW Supreme Court seeking $5.6 million damages from the former employee.
Leighton informed the Australian Stock Exchange of the AFP investigation in February last year, saying it was "fully co-operating on possible breach of code of ethics".
Mr Elliott said the Leighton statement appeared more of a public relations exercise than a company fulfilling its legal obligations under the Corporations Act.
"It was all sort of in a governance-type context and soft words," he said. "It said nothing. And I think the key to it all is the market took it as such. If you look at the historical share price it didn't blip."
After Fairfax Media published the allegations, Leighton's shares fell 12.7 per cent to $16.74 last week. On Monday, the share price clawed back some of those losses, rising 2.9 per cent to $17.22.
Mr Elliott, who is running the class action over collapsed debenture issuer Banksia Securities, said he decided to act swiftly on the Leighton writ because "enough was enough".
"It's gone on for three years. I just think it's time for Leighton's to come clean and they have had plenty of time to investigate."
Jenny Tallis at class action lawyers Maurice Blackburn said "the market has been surprised by these serious corruption allegations made over the past few days".
"We are of the view that our clients have strong prospects of succeeding in a claim for compensation for Leighton's breaches of the continuous disclosure laws," she said. "Given the strength of our clients' claim we have been engaging in a pre-litigation settlement process since May 2013."