Saipem's board accepted Pietro Franco Tali's resignation after prosecutors notified the company they were looking into alleged corruption "up through 2009 in connection with certain contracts in Algeria", it said in a statement.

"Saipem believes that its business activities have been conducted in compliance with applicable law, internal procedures, its code of ethics and Model 231," a set of Italian rules on corporate probity, it said.

"The company has offered its full cooperation to the Milan prosecutor's office," it said, adding that it would bring in external consultants to carry out an internal audit to see if anti-bribery rules were respected.

The board also suspended two other Saipem executives, saying that one of them -- Pietro Varone, chief operating officer of the engineering and construction unit -- was named in the notification from prosecutors.

Tali will be replaced by Saipem board member Umberto Vergine.

The inquiry is into suspected backhanders given to Algerian major Sonatrach, where several top executives including the president have resigned following an investigation by Algerian authorities, Il Sole 24 Ore business daily reported.

The biggest contract in the inquiry was for building the GK3 gas pipeline and was worth $580 million (443 million euros). Saipem won the contract in 2009 for building the system in northeast Algeria, the report said.