The executive, who has asked not to be named, said he was sitting across the desk from the officer when a pistol was produced and pointed at him.

''He said, 'this deal will earn you and your company a lot of money. I want one million US dollars,''' the executive said.

The matter was reported to management in Sydney and the executive offered extra security, but he soon resigned from Australia's biggest defence contractor.

The encounter highlights the physical and commercial dangers faced by Australian business people in some of the world's more corrupt regions.

It was revealed in March that Australian Federal Police are investigating Tenix's dealings in Asia between 1999 and 2008 to determine if it paid bribes.

At the centre of the inquiry is a 2000-01 contract between Tenix and the Philippines government for six search and rescue vessels. It emerged this week that police have been told by people familiar with the deal that Tenix executives may have established secret offshore bank accounts while negotiating with Philippines officials. Under scrutiny are alleged multi-million-dollar payments by Tenix to politically-connected Manila lawyer Romela Bengzon and a claim by a prominent Philippines politician that he declined a 2004 offer from the company of a large contribution to his election campaign.

Cyril Peel, a former professional Sydney rugby player who became Tenix's representative in Manila during the 1990s, says he warned Tenix management that the company's push for a second shipbuilding contract with the Philippines would be met with demands for bribes.

"I had warned the Salteris and their senior executives on many occasions in person and in writing that with [Joseph] Estrada becoming president things would change, the old Marcos days of kickbacks would return," said Mr Peel, who is in a legal dispute with Tenix.

Tenix signed its second shipbuilding contract with the Estrada administration in 2000-01. Mr Estrada was removed as president in 2001 amid corruption charges and sentenced to 40 years' jail. He was pardoned by his presidential successor, Gloria Arroyo.

Mr Peel, who was sacked by Tenix weeks after it won its initial contract in 1998, reveals how he and Australian diplomats convinced the Philippines government to move its coast guard out of the navy's control and into the transport portfolio to qualify for Australian aid. Tenix's Philippines deals were funded through $21 million in aid grants and $109 million loan guarantees.

The owners of Tenix's defence business at the time, Sydney's Salteri family, declined to answer questions.

A spokesman for the Salteri family company, Olbia Pty Ltd, earlier this year said there was no evidence of impropriety in Tenix's overseas dealings. The police investigation continues.