Tuesday, Feb 14, 2012

AMMAN (Dow Jones)--Senior Iraqi oil officials say they are unaware of an investigation by Australian police into an alleged illegal payment involving a subsidiary of Leighton Holdings Ltd. (LEI.AU) and a contract to expand the crude-oil export facilities near Basrah.

Dhiaa Jaafar, head of Basrah-based South Oil Company told Dow Jones Newswires on Monday that he has not seen the allegations, or had any contact with authorities concerning the investigation now underway in Australia. A senior official within Iraq's oil ministry in Baghdad also said that the authority, which controls the nation's petroleum industry, has not been informed about the probe, or contacted by Australian police.

Leighton Holdings Ltd. said Monday that Australian police launched an investigation after the construction company notified authorities of a possible illegal payment by one of its subsidiaries linked to work expanding Iraq's crude-oil export facilities. Leighton said it wasn't yet known if there had been any wrongful conduct or whether the company would suffer adverse financial consequences as a result.

The possible breach of the company's code of ethics and Australian laws relates to payments that may have been made by Leighton Offshore Pte. Ltd. in connection with work in Iraq, it said in a statement to the Australian securities exchange. Leighton Chairman Stephen Johns said the company volunteered the information to police after becoming aware of a possible breach.

In October 2010, Leighton Offshore said it had received a contract worth US$733 million to install three moorings and 120 kilometers of pipeline in the Persian Gulf for Iraq's South Oil Co., part of work to redevelop export facilities from the Fao Terminal near Al Basrah.

A year later, the company said the subsidiary had received a US$79 million contract from South Oil for an additional mooring, plus a US$518 million contract from the Iraqi company for further work, including two offshore platforms and a 75-kilometer pipeline being financed through a development assistance loan with Japan International Cooperation Agency.

Work on the initial contract was due to be completed in the first half of 2012, Leighton had said in its financial 2011 results.

News of the suspect payment came as Leighton said it expected a profit of between 600 million Australian dollars and 650 million Australian dollars (US$642 million and US$695 million), excluding one-time items, for the financial year to June 30, and a similar range for the year through December. The company is moving to a calendar year for its results to bring them into line with majority owner Hochtief AG (HOT.XE) and its parent Actividades de Construccion y Servicios SA. (ACS.MC).

-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com

--Robb M. Stewart in Melbourne contributed to this report.

(END) Dow Jones Newswires

14-02-12 0647GMT