Australian Prime Minister Kevin Rudd has launched an investigation into accusations that his office lobbied for Government funds on behalf of a friend, but has denied any wrongdoing.
Mr Rudd on Friday rejected claims raised in a Senate inquiry that his office had lobbied on behalf of Ipswich car dealer John Grant, who was seeking assistance under the $A2 billion OzCar vehicle financing scheme.
Opposition Leader Malcolm Turnbull had demanded Mr Rudd explain his links to Mr Grant or resign.
Despite assurances his government had done nothing wrong, Mr Rudd has asked the Commonwealth auditor-general to investigate the matter by the end of July.
Earlier on Friday, the Treasury official in charge of OzCar, Godwin Grech, told a Senate inquiry his recollection was that Mr Rudd's office had first raised Mr Grant's plight with him.
A clearly distressed Mr Grech told the inquiry that, as far as he could recall, he received an email from Mr Rudd's office about Mr Grant. That email can't be found and Mr Rudd suggests it might never have existed.
"Based on the evidence that we have, all I can conclude is the email (in question) ... is false," he said.
Newspaper publishes 'leaked emails'
The Australian Government has denounced as a fake an email published by a Sydney newspaper, which it says was purportedly sent by Mr Rudd's senior advisor Andrew Charlton to Mr Grech.
The February email published by The Daily Telegraph reads in part: "Hi Godwin, the PM has asked if the car dealer financing vehicle is available to assist a Queensland dealership, John Grant Motors, who seems to be having trouble getting finance."
The Federal Finance Minister Lindsay Tanner told the ABC he does not believe the email is genuine.