The Australian government has begun an official inquiry into whether the country's monopoly wheat exporter made illegal payments to the former Saddam Hussein regime in Iraq. Lawyers for the inquiry have alleged that the company knowingly paid hundreds of millions of dollars in bribes to the former Iraqi president, and deceived the United Nations about the payments.

The payments were made under the United Nation's now-tainted oil-for-food program. Lawyers leading the inquiry claim that the Australian Wheat Board - now known as A.W.B. Limited - knew that millions of dollars it had ostensibly paid for transport services actually ended up in the hands of the former Iraqi government.

The inquiry was told on Monday that this was in direct breach of U.N. sanctions imposed on Iraq.

A.W.B. has consistently denied that it knew these transportation fees - which were paid to a Jordanian firm - were ending up in Saddam Hussein's pocket. The company has denied any wrongdoing, and insists it was deceived by Iraqi officials.

Tribunal lawyer John Agius has rejected this claim, and insists that A.W.B. management knowingly paid bribes. "The transport fee was a method of passing funds to Iraq, and?A.W.B., at a high level of management, agreed to use the transport fee for that purpose," he said.

The Australian wheat exporter was the largest single supplier of humanitarian goods to Iraq under the oil-for-food program, shipping millions of tons of grain between 1996 and the U.S.-led invasion in 2003.

Iraq was placed under international sanctions after its invasion of Kuwait in 1990, and normal trading with the country was outlawed. The U.N. plan was designed to allow Iraq to sell enough oil to import necessary food and medicines. A U.N. report last year concluded that the program was riddled with bribery, involving individuals and corporations in many countries.

The report showed among other things that A.W.B .had made a total of $220 million in so-called "side payments" for the transportation of wheat. The U.N. found no direct evidence that A.W.B. had knowingly paid bribes. However, investigators said the company's staff should have realized where the money was going. The U.N. asked the Australian government to investigate the matter.

The inquiry here in Sydney will determine if A.W.B. and two other smaller organizations had broken any Australian laws in their oil-for-food dealings. The commission can recommend that executives be prosecuted if the allegations are substantiated.