Police say Kevin Rudd email was forged

The Australian media are calling it “Utegate”, and the smoking gun was supposed to be an email seeking preferential treatment for a car dealer friend of the Prime Minister, Kevin Rudd.

But although the friend, John Grant, did lend Mr Rudd a second-hand ute (pick-up truck) in which to campaign in his Queensland electorate, the email was today declared a fake. And after a day of high political drama, it was the Opposition leader, Malcolm Turnbull, who was facing calls to resign, rather than the Prime Minister.

The row centres on a fund set up by the government to assist car dealers facing problems as a result of the global economic crisis. A senior Treasury official, Godwin Grech, who manages the fund, claimed last week that Mr Rudd’s office had asked that special attention be given to Mr Grant’s application for credit.

Mr Grech said he was first alerted to Mr Grant’s case via an email from Mr Rudd’s economic adviser, Andrew Charlton. Yesterday Australian Federal Police raided Mr Grech’s Canberra home and, after examining his computer, said the email had been “created by a person or persons other than the purported author”.

While Mr Grech, a civil servant, has not been directly accused of concocting the email, Canberra is awash with rumours that figures within Mr Turnbull’s Liberal Party played a role, in an effort to discredit Mr Rudd. Mr Turnbull, who has been calling on Mr Rudd and his Treasurer, Wayne Swan, to resign for days, denied any involvement in the forgery yesterday.

However, Mr Rudd said Mr Turnbull should step down. “This email is a fraud, it is a fake, it is a fabrication,” he told Nine Network television. “Therefore, my own judgement is that Mr Turnbull’s got no option … but to do the honourable thing: apologise and resign.”

Utegate, while appearing to have flimsy foundations, is the biggest challenge to face the 19-month-old Labor government. Mr Rudd – whose Defence Minister was forced to resign earlier this month after a series of damaging revelations – was accused of misleading parliament last week when he denied that his office had helped Mr Grant in his quest for a hardship loan.

The government asked police to launch a fraud investigation after the email was published in Australian newspapers last weekend. The now discredited email read: “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. If you can follow up on this asap that would be very useful. Happy to discuss. A.”

Mr Swan, who has admitted once buying a car from Mr Grant, yesterday released 21 pages of genuine emails exchanged by Mr Grech and Mr Charlton, which he says demonstrate that other dealers received similar treatment to Mr Grant.

Mr Turnbull, who tried to move a censure motion against Mr Rudd and Mr Swan in parliament yesterday, ended up being censured himself.