Australia car dealer political row escalates

Australia's political leaders traded furious accusations in parliament on Monday over a scandal that has put their jobs on the line, as an email at the centre of the row was reported as a fake.

Opposition leader Malcolm Turnbull repeated his claim that Treasurer Wayne Swan had lied over the so-called "Utegate" affair, prompting an angry rebuttal from Prime Minister Kevin Rudd.

Turnbull says Rudd and Swan helped a car-dealer friend seeking government funds, basing his claim on an email printed in weekend newspapers which supposedly came from the Treasury.

But public broadcaster ABC, without citing sources, reported that the email was a fake and a senior Treasury official whose testimony prompted the row was being interviewed by police.

Police told AFP they were conducting investigations as a result of a referral from the attorney-general's department, but would not give further comment.

If the email is a forgery, it will torpedo Turnbull's argument and give weight to the prime minister's repeated calls for the opposition leader to quit.

On Monday, Rudd dismissed the correspondence as a fake and claimed that Turnbull's "fingerprints are all over this email, and he knows it."

"This fraudulent email was the rock on which the leader of the opposition has constructed his case against me and the Treasurer," Rudd said.

"This rock has now disintegrated into sand... these facts demonstrate beyond all reasonable doubt that the leader of the opposition has been fundamentally untruthful with the Australian people."

Swan also accused Turnbull of "grubby opportunism."

"It turns out he's been in possession of a fake email," Swan said.

"He must pledge today to make available all of the resources used by the opposition for a police inquiry, because it is clear the grubby opportunism of the leader of the opposition knows no bounds."

The exchanges follow days of claim and counter-claim by Rudd, Swan and Turnbull, who are all facing a severe test of their credibility and risk losing their jobs.

Treasury official Godwin Grech sparked the controversy when his testimony to a senate inquiry suggested Rudd and Swan may have misled parliament over the affair.

Grech told senators on Friday that he had the impression Rudd and Swan were behind the case of John Grant, a car-dealer seeking access to government funds, but added he had no proof.

Police executed a search warrant at Grech's home on Monday and IT experts were examining his computer equipment, ABC reported.

But Turnbull kept up his attack, telling parliament: "What we have here is a shocking abuse of power."

"We have a Treasurer who has used his considerable influence to get a favour for a mate. And not just any mate -- a mate who is a benefactor of the prime minister," he added.

Grant is a neighbour of the prime minister who once lent him a "ute" or utility vehicle -- Australia's ubiquitous two-seater car with a flat-bed back -- for use in his Brisbane constituency.

The row constitutes a tough challenge for the government of Rudd, which has enjoyed strong public support since taking power in late 2007.