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Australian PM refuses to resign over crisis

AUSTRALIAN Prime Minister Kevin Rudd and his treasurer have rejectedw opposition calls to resign over their relationship with a car dealer which commentators say has created the 19-month-old government's biggest political crisis.

Opposition Leader Malcolm Turnbull said on Saturday that Rudd and Treasurer Wayne Swan repeatedly misled Parliament this month when they denied that Rudd's friend, car dealer John Grant, had been given special attention when he applied for a government loan to cope with the global credit crunch.

Turnbull said Rudd and Swan had no choice but to resign.

Swan said he would not.

Rudd maintained that he did not mislead Parliament and said on Saturday that Swan had "acted entirely appropriately."

The accusation that the government does favors for its political friends is damaging for Rudd. The controversy will likely dominate Parliament when it resumes today for one week before a break.

Turnbull cited an e-mail that was purportedly a request by a Rudd staffer in February for Treasury officials to give priority to Grant's credit request. The e-mail was published in News Corp newspapers in Australia on Saturday,

But the government claimed the e-mail is a forgery created by Turnbull's Liberal Party and has called in police to conduct a fraud investigation.

Turnbull has denied his party faked the e-mail.

Swan said yesterday he stood by his claim that Grant's request for government credit was treated no differently than that of any other car dealer.

"I regard this as part of the smear campaign that has been conducted against the prime minister and myself by the leader of the opposition, and it's time for him to put up (evidence) or shut up and resign," Swan told Nine Network television.

Grant, who gave Rudd a secondhand pickup truck to use for campaigning and once sold Swan a car, never received a loan from a A$2 billion (US$1.6 billion) government fund set up as a last resort for car dealers struggling to access credit.

Rudd told Parliament that no one in his office made any representation to the Treasury, which runs the fund, on Grant's behalf.

The fund manager, Godwin Grech, told a Senate inquiry last Friday that he recalled being first alerted to Grant's case by an e-mail from Rudd's office. But he also said he could find no record of such an e-mail and conceded his recollection could be wrong.


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