"The allegations in The Guardian have nothing to do with the truth and reality but represent a pinnacle of slander and lies," the former ambassador to Washington said in a statement carried on Tuesday by state news agency SPA.
The British newspaper has alleged payments totalling more than two billion dollars were paid to Prince Bandar.
Britain’s defence giant BAE is alleged to have set up a secret slush fund for members of the Saudi royal family to secure continued business, dating back to the massive Al-Yamamah arms deal signed in 1985.
"All the sums mentioned by the newspaper were transferred from Saudi government accounts to other accounts of the Saudi government, and not to my personal accounts," the prince said.
The prince’s lawyers last week issued a statement "categorically denying" he received any "improper secret commissions or backhanders" for the Al-Yamamah deal, according to the BBC which has also alleged secret payments were made.
The statement said the money was paid into accounts in the name of the Saudi Arabian Ministry of Defence and Aviation (MODA).
"Any payments into those accounts made by BAE were pursuant to the Al-Yamamah contracts and as such would not in any way have been ‘secret’ from the parties to those contracts," it said.
"Whilst Prince Bandar was an authorised signatory on the accounts any monies paid out of those accounts were exclusively for purposes approved by MODA."
