Australia row over 'fake' e-mail!

Kevin Rudd said the opposition leader should resign over the allegations

Australian MPs are locked in a fiery debate over claims that Prime Minister Kevin Rudd tried to help a car-dealer friend get a government loan.

The debate is focusing on an e-mail purportedly from the prime minister's office asking the Treasury to deal with the loan request "asap".

Opposition leader Malcolm Turnbull said the e-mail showed an "abuse of power" and Mr Rudd must resign.

But in a preliminary investigation, police said the e-mail had been faked.

Analysts say it is the biggest test Mr Rudd has faced since he was elected in 2007.

The row has been brewing for weeks, since it emerged that car dealer John Grant lent a pick-up truck to Mr Rudd for use in his constituency.

Mr Grant is a friend of the prime minister, and opposition politicians believe Mr Rudd tried to help him secure money from a Treasury fund called OzCar to help his business deal with the global economic slump.

The row escalated on Friday, when Treasury official Godwin Grech told a Senate committee he thought he could remember receiving an e-mail regarding funding for the car salesman, but added he had no proof.

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 Opposition leader Malcolm Turnbull

Police were called in to search Mr Grech's home on Monday and specialists examined his computer equipment.

"Preliminary results of those forensic examinations indicate that the e-mail referred to at the centre of this investigation has been created by a person or persons other than the purported author of the e-mail,'' the Australian Federal Police said in a statement.

The row forced a special session of parliament on Monday in which the two sides traded insults and demanded resignations.

Mr Rudd had given Mr Turnbull an ultimatum to produce the e-mail in the parliamentary session, or resign.

"It is false, fake and a forgery. There can be no graver offence in public political life than to be in the business of communicating a document that is false, out there, through the media, in order to bring your political opponent down," Mr Rudd said.

He told parliament the opposition had failed to provide the evidence so had "no alternative now but to stand up and apologise and resign".

But Mr Turnbull mounted his own 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 said.

Shadow Treasurer Joe Hockey demanded Mr Rudd and Treasurer Wayne Swan should both stand down.

BBC NEWS REPORT.