A ‘dramatic failure in governance’ as bribe claims hit Leighton board

Published 04 October 2013 00:05, Updated 07 October 2013 09:10

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A ‘dramatic failure in governance’ as bribe claims hit Leighton board

Leighton Holdings chairman Bob Humphris. Photo: Dom Lorrimer

Leighton Holdings chairman Bob Humphris, along with other directors, oversaw a “dramatic failure in governance” that enabled corruption and “a litany of disasters” to engulf the firm’s international operations, according to a leaked federal police interview with a former top Leighton executive.

A Fairfax Media investigation has also obtained an email from Leighton Holdings’ former chief operating officer, Bill Wild, that says that “everywhere you look in LIL [Leighton International Ltd] there is evidence of corruption and/or incompetence”.

Mr Wild, who could not be reached for comment, discovered corruption in Leighton’s dealings in Malaysia in 2011, including plans to pay millions of dollars in kickbacks.

Fairfax Media can also reveal that certain Leighton International directors – including Mr Humphris and current director Bob Seidler – failed to raise the alarm about a suspicious $80 million “onshore” construction subcontract to be awarded to a Monaco firm and which was detailed in key board documents about a major project in Iraq in October 2010.

A cursory check of Leighton’s computer system at the time would have revealed that those same documents had, just weeks earlier in September 2010, been revised to conceal a highly suspicious $40 million “agency and security support services” fee to the same Monaco firm, Unaoil.

A comparison of the September and October documents suggests the $40 million ‘‘agency’’ fee was shifted into the $80 million ‘‘onshore’’ contract given to Unaoil and which is now at the centre of a bribery scandal.

On Thursday, Fairfax Media revealed other internal company documents stating that Iraqi officials allegedly instructed Leighton to award Unaoil an inflated $87 million contract if Leighton were to win a $750 million contract.

Another internal Leighton file dated February 2011 and sent to director Peter Gregg reveals that a company audit had found ‘‘less awareness’’ in the firm about ‘‘prohibited transactions’’ – such as facilitation payments made to win contracts overseas.

The audit found that Leighton had failed to keep detailed registers of the fees paid to, and services provided by, the firm’s overseas middlemen whose job it was to win contracts.

‘‘Not all of the reviewed consultancy agreements show the high level of service details and payment transparency required to avoid misinterpretation of the services provided,’’ auditor Christof Brixel said in his report.

‘‘Inconsistencies had been found.’’

Read the full story at The Australian Financial Review.

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