Construction giant Leighton Holdings has sacked a senior manager over the alleged misconduct of a subsidiary carrying out work in Iraq.

The Australian Federal Police (AFP) is investigating allegations Leighton Offshore made improper payments in an oil project in Iraq.

The matter was referred to the AFP by Leighton in November 2011.

The company also conducted an internal review into the allegations, which has confirmed governance standards relating to the proper documentation of contractual arrangements failed to be met by Leighton Offshore, it said on Thursday.

As a result, a senior manager has been dismissed, Leighton said, without naming the person.

“Leighton’s values are integral to Leighton’s approach to business,” Leighton chief executive Hamish Tyrwhitt said in a statement.

“No deviation from those values will be tolerated and appropriate disciplinary action will be taken if necessary.”

Leighton is continuing to cooperate with the AFP investigations, it said.