By Theo Leggett BBC World Service business reporter

Iraq bought wheat under a UN deal

Australia, the main wheat supplier to Iraq since the 1991 Gulf War, is outraged at allegations its exporters overcharged the Iraqis, and that some of that money may have ended up in the accounts of Saddam Hussein's family.

Australia's Trade Minister, Mark Vaile, has officially rejected the claims, and informed the US that his government finds the allegations insulting.

Over 1,000 Australian soldiers fought alongside the British and American forces in the recent war in Iraq, but now commercial considerations are driving a rift between the erstwhile allies.

'No proof'

Both the US and Australia are among the world's major exporters of wheat.

Australia became Iraq's principal supplier of wheat under the oil-for-food programme administered by the United Nations.

Now US Wheat Associates, a farm lobby group, has made serious allegations about the way Australian farmers behaved when dealing with Saddam Hussein's regime.

It says the Australian Wheat Board (AWB) overcharged for deliveries and wants it to state clearly where the money went.

It claims there is evidence that money from similar contracts in other commercial sectors may have ended up in the hands of the former Iraqi leader and his relatives.

"We're not saying that we have any proof that's how the AWB handled their things," US Wheat Associates said spokeswoman Dawn Forsythe in an interview on Australian television.

She added: "We leave it people to make their own decisions."

Post-war contracts

"But in the meantime, we think it would be healthy if the AWB would come clean - rather than come back and attack us, tell us exactly what you did," she said.

The AWB has called the claims baseless and outrageous.

It says that the prices charged to Iraq were high because of the steep cost of delivery and distribution.

Nevertheless, US Wheat Associates has written to Secretary of State Colin Powell to suggest that Australian wheat should not be included in new supply contracts with Iraq.