Wal King faces AFP on bribery

Former Leighton chief executive Wal King will be ­interviewed by the Australian Federal Police in the coming weeks over the Iraq bribery scandal as speculation mounts that the AFP is moving to finalise its investigation into the affair.

It is understood Mr King is willing to co-operate with the AFP and will maintain he has no case to answer over allegations he approved the payment of a bribe in Iraq. He declined to comment yesterday but has previously stated: “I categorically deny prior knowledge of corrupt practices in Iraq.’’

There is speculation that the AFP has also been in contact with another former Leighton chief executive, David Stewart, who wrote an explosive handwritten memo that alleged he had been told by another Leighton senior executive, David Savage, that Mr King had approved $42 million in kickbacks to contractor Unaoil on an oil project in Iraq.

Mr King’s lawyers, who have obtained a copy of the memo, have previously claimed it was “flimsy and patently unreliable’’, was not signed by Mr Stewart and was prepared after the alleged discussion with Mr Savage.

They have also said Mr Savage has denied making the comment to Mr Stewart. Mr King has been granted access to crucial documents by Leighton to help support his case.

He is separately suing Fairfax Media for defamation after it published the allegations in Mr Stewart’s note.

The defamation case is due for hearing before a judge in the coming weeks after Fairfax’s lawyers made a number of objections to Mr King’s characteris­ations of the alleged defamatory accusations published in a series of articles last year.

New Leighton chief executive Marcelino Fernandez Verdes is said to be concerned about the AFP investigation and was surprised when Australian Secur­ities & Investments Commission chairman Greg Medcraft revealed last month that the matter was being investigated by ASIC.

It is understood ASIC’s move is completely unrelated to the AFP investigation and under current law ASIC will not be able to rely on any evidence collected by the AFP in its inquiries.

Mr Fernandez Verdes, who is expected to return to Germany at the end of this week for several weeks, is also said to be concerned about Leighton’s growing exposure to the Gorgon jetty project in Western Australia, which is worth more than $2bn.

While former Leighton chief Hamish Tyrwhitt was believed to have been prepared to wait until the project was completed in the middle of this year before discussing outstanding claims with the project operator Chevron, Mr Fernandez Verdes is expected to take a more proactive approach.

It is understood one of the key points of contention between Chevron and Leighton relates to the calculation of weather delays.

While the agreement between the two makes provision for ­delays flowing from cyclonic weather conditions, there have been few actual cyclones in the area during the construction phase.

Chevron is said to be sticking to the letter of the law in the contract, meaning Leighton must take responsibility for weather delays not related to cyclones.

Leighton and Chevron are believed to have agreed on a so-called “first and final settlement’’ deed on the project a year ago when an extension was agreed to enable the project to be completed after significant delays and cost overruns.

That could yet be challenged by Leighton to cover delays and blowouts.