'Utegate' heat switches to Turnbull

CANBERRA - Australian politics remained in turmoil yesterday amid reports that a Treasury official and a former staffer of Opposition Leader Malcolm Turnbull were being questioned about a fake email at the heart of a developing scandal.

The email, found during a raid on Treasury official Godwin Grech's Canberra home, was confirmed to be fraudulent by federal police.

"Preliminary results of those forensic examinations indicate that the email ... has been created by a person or persons other than the purported author of the email," a police statement said.

Police said a 42-year-old man had been interviewed in relation to the matter, "consistent with preliminary forensic advice".

The statement came after normal parliamentary business was pushed aside by furious debate over allegations of improper influence and lying to Parliament, helping to push the scandal towards a crisis that could claim significant political scalps.

As the Government used its majority to censure Turnbull, the Opposition's allegations that Prime Minister Kevin Rudd had improperly used his influence to help a friend in financial trouble lost all credibility.

The heat turned on Turnbull instead, helping to blunt his bid to swing the attack on to Treasurer Wayne Swan, seen as more vulnerable after the publication of an electronic trail between his office, Brisbane car dealer John Grant, and the Treasury.

Swan admitted "with no apologies" that he had spoken to Grant about access to a special finance fund, referred him to the Treasury, and received a series of emails relating to the progress of discussions involving Grant.

Grant is a friend of Rudd's who had lent the Prime Minister a second-hand utility for election campaigning, and who had also sold Swan a A$12,000 second-hand Toyota Hi-Lux.

The issue erupted into a major political furore last week when Grech told a Senate inquiry he had received an email from Rudd's office and that it had been made clear Grant was "not your average constituent".

Grech's evidence, which was cut short by Government senators, contradicted previous statements to Parliament by Rudd and Swan that Grant had received no special consideration in his discussions about financial help from the Ozcar scheme set up to help car dealers stranded by the withdrawal of overseas financiers in the wake of the global economic crisis.

No trace of the email could be found and Rudd claimed it was fraudulent.

But the furious debate that has led to reciprocal calls for resignation between Rudd, Swan and Turnbull late yesterday appeared to be taking an even more ominous turn in separate investigations by the federal police and Auditor-General.

ABC radio reported that during a raid on Grech's home the missing email had been found, apparently sent from the Treasury, and that Grech was being interviewed by police.

News Ltd's The Punch blogger, David Penberthy, said police were now investigating a link between Grech and a former senior adviser in Turnbull's office.

He said the adviser - a former adviser to former Treasurer Peter Costello who had also worked for the Treasury - left Turnbull several weeks ago.

There was no suggestion that he had engaged in any wrongdoing, but police wanted to determine his involvement

"If it emerges that anyone inside Mr Turnbull's office was involved in the production or dissemination of the email, the Opposition Leader will become the politician with the most to lose from Utegate," Penberthy wrote.

"By the end of the day he will either have sacked his staff member, or if it emerges that he, as alternative Prime Minister, knew of any scam, Mr Turnbull will be gone."