The Weir Group found discrepancies in its oil-for-food programme role

The Weir Group said more than �4m was paid on top of normal commission and it does not know who received the money.

It had previously denied it struck illegal deals with Saddam Hussein's regime to win work in Iraq.

An internal review found that higher than normal payments were made and the company has apologised.

Weir Group is one of a number of companies hoping to get a slice of the �1bn Iraqi re-building programme.

The board considered it essential that we make public the current information Sir Robert Smith Weir Group chairman

Following its investigation, it said that 15 out of the 37 contracts, for water treatment equipment, had been raised in price by �4.2m.

It found that payments were made to an agent, in addition to sales commission.

Chairman, Sir Robert Smith, said: "It is most regrettable that previous statements, whilst made in good faith, were incorrect. The problem dates back to 2000.

"We undertook a thorough review of these contracts and although the investigation has not yet concluded the board considered it essential that we make public the current information."

Sanctions imposed

Shares in Weir, which employs about 8,000 people worldwide, fell more than 3% following the announcement.

But the company said the new information would not alter its outlook in 2004, which includes a pick-up in orders in the final six months.

Weir, which has former Nato Secretary-General Lord Robertson on its board, was granted 37 contracts as part of the programme through its overseas business, Wesco Dubai.

The company's profits totalled �56.7m last year.

Following Iraq's invasion of Kuwait in 1990, the UN Security Council imposed sanctions prohibiting trade with Iraq.