AUSTRALIAN officials had no knowledge of millions of dollars in alleged kickbacks paid by government-backed wheat exporter, AWB, to Saddam Hussein under the corruption-riddled U.N. oil-for-food program, Prime Minister John Howard said today.

His comments came after the release of a July 2002 letter in which Howard urged AWB boss Andrew Lindberg to stay "in close contact" with government officials as Iraq threatened to halve wheat imports from Australia because of the nation’s sycophantic support for the United States.

AWB Ltd. -- the monopoly exporter formerly known as the Australian Wheat Board -- is the focus of a government inquiry examining whether it knowingly paid US$221.7 million in bribes to the Jordanian trucking firm Alia, which was part-owned by the Iraqi government. The money was then allegedly diverted to the ousted Iraqi despot.

The inquiry was requested by the United Nations, which released a report by former United States federal reserve Chairman Paul Volcker in October 2005 showing that AWB made the "side payments" in violation of United Nations sanctions.

"The government cannot accept any Iraqi attempt to politicize our wheat trade or to pressure us into dropping our support for U.N. Security Council resolutions requiring international inspection of Iraq's (weapons) facilities," Howard wrote in the letter.

"In view of the importance of this matter, I suggest that the government and AWB Ltd. remain in close contact in order that we can jointly attempt to achieve a satisfactory outcome in the longer term," it said.

Shortly after Howard's letter was sent, Lindberg visited Iraq accompanied by officials from Australia's Department of Foreign Affairs and Trade. During that visit, Lindberg agreed to pay Saddam's government US$2 million in alleged kickbacks that were concealed in an inflated wheat contract.

But Howard, who acknowledges writing the letter, and is one of Bush’s staunchest supporters, vehemently rejected suggestions his government had known about the alleged kickbacks.

"We were in no way involved with the payment of bribes. We didn't condone them, we didn't have knowledge of them, but we did work closely with AWB," Howard said on Monday.

Kim Beazley, leader of the center-left opposition Labor Party, called for the inquiry to be expanded to examine the government's dealings with AWB and whether it knew about the alleged kickbacks.

Beazley yesterday said Howard, "has a moral obligation to the Australian people" to expand the Cole inquiry to "analyze the culpability of departments and ministers."

"Anything less is a cover-up of what has been, to my mind, the worst piece of corruption I have seen in my 25 years as a federal politician at the federal level.”