A combination of internal division and disagreement with parent company Hochtief created conditions which led to questionable decisions regarding corporate governance Australian at construction giant Leighton Holdings, a media report says.

Quoting anonymous sources, a report in the Australian Financial Review says two former chief executives of Leighton, Wal King and David Stewart, were allegedly aware of kickbacks paid to secure contracts in Iraq.

King has publicly denied having any knowledge of any improper payments, but former executives say he at the time was locked in serious negotiations with parent company Hochtief about whether or not he would remain at the company, and that the company’s senior management were reluctant to acknowledge it had taken on too many contracts and spread itself too thinly in light of this.

“Wal desperately wanted to stay, so he couldn’t have any bad news, he had to keep the company and the share price growing” a former executive reportedly told the AFR.

Leighton shocked the market in February last year when it self-reported what it describes a possible ‘breach of the law’ by payments made to one of its subsidiaries in in connection with work in Iraq to expand offshore loading facilities for that country’s crude exports.

It was rocked further by media reports earlier this month alleging a culture conducive to cover ups.

The company has hit out at the reports, many of which it says are inaccurate, saying that the board referred allegations associated with the Iraqi scandal to the Australian Federal Police and that further allegations concerning employee fraud regarding the construction of a barge in Indonesia – behaviour with regard to which the company was seeking the recovery of $5.6 million –  had been investigated on numerous occasions by external auditors, engineers and lawyers well before any media reports regarding the incident.

Leighton also it has overhauled its governance regime – revising its Code of Conduct, beefing up tender risk controls and risk management capabilities, establishing a five stage tender review process, beefing up an internal audit program and overhauling its management team.