AWB shares closed 25 cents lower at $5.52, taking the stock's losses to more than 13 percent for this week.
The Cole inquiry underway in Sydney is investigating three Australian companies named in the UN's Paul Volcker report into the UN's oil-for-food program.
On Thursday it heard that AWB provided kickbacks via the UN's oil-for-food program in return for contracts in Iraq, and tried to conceal if from the United Nations.
The managing director of the Australian Wheat Board (AWB), Richard Lindberg, admitted to the inquiry that AWB made a deal with Iraq under the oil-for-food program that turned out to be a clear breach of UN sanctions.
He also admitted that AWB masked the elaborate scheme of kickbacks to Saddam's government, believed to total about A$300 million, by creating a "sham" agreement.
The inquiry also heard that AWB inflated its prices for wheat deliveries so that it could recover a debt of US$7.8 million owed by the Iraqi regime to another Australian company, for which AWB received US$500,000 (A$668,795).
It emerged that Mr Lindberg discussed wheat exports to Iraq with Australian Foreign Affairs Minister Alexander Downer in 2003, prompting the minister to write a letter, the The Australian newspaper published on Thursday.
’Nothing to hide’
In the letter Mr Downer slammed what he called "hysterical claims in the media" about the government's role in the affair and said the federal government had nothing to hide.
"Many government ministers, past and present, from both sides of politics, have met with AWB, as the sole exporter of Australian wheat," Mr Downer wrote.
The AWB’s Mr Lindberg told the inquiry that the discussions were not specifically about individual contracts, Mr Downer said.
"I have nothing to hide in this matter. The government co-operated fully with the Volcker inquiry and established the Cole inquiry.
"I have instructed the Department of Foreign Affairs and Trade to co-operate fully with the Cole inquiry,” Mr Downer said.
Mr Lindberg told the inquiry that he met Mr Downer after the AWB was accused of deliberately inflating prices in its wheat contracts to fund the illegal kickbacks.
Mr Lindberg said they discussed questions about AWB's business in Iraq but not individual contracts.
Mr Downer said the commission would have access to staff and documents of the Department of Foreign Affairs and Trade.
"People should allow the commission to reach its conclusions before making hysterical claims in the media," he said.
Australia’s opposition Labor party called for Mr Downer and Deputy Prime Minister and former trade minister Mark Vaile to make themselves available as witnesses to the Cole inquiry.
Labor's foreign affairs spokesman Kevin Rudd said the Howard government received a formal warning in 2000 from the UN about the Australian wheat marketer's dealings in Iraq.
Mr Rudd said it beggared belief that nobody in the Howard government was warned about the scandal, or knew about it.
The shares of the monopoly wheat exporter have been hit hard by the revelations, dropping 10 percent in three days.
Prices inflated
But in the most dramatic evidence so far, the inquiry detailed a paper trail showing AWB effectively ripped off the UN to retrieve an almost US$8 million debt owed to Tigris Petroleum (a company set up by former executives from Australian resource company BHP) by a bankrupt Iraqi government.
AWB allegedly collected a US$500,000 fee for its services.
Resources giant BHP's brief involvement in the wheat trade to Iraq a decade ago, which the company says was a "humanitarian gesture" to feed starving Iraqis, was explained to the inquiry as an effort to win petroleum exploration rights in the country.
BHP, now BHP Billiton, handed responsibility for the debt to Tigris Petroleum.
That company, registered in Gibraltar and with an office in Melbourne, engaged AWB to help it recover the debt for a wheat shipment that was sold to Iraq on credit in 1996, before the oil-for-food program began.
Mr Lindberg admitted the company inflated its wheat prices to recover the US$7.8 million debt and he informed AWB's board of the move.
To hide the arrangement AWB drew up a bogus agreement to pay Tigris US$7.8 million as a "commission" for lobbying the Iraqi government to resume its wheat trade with Australia after the business stalled in 2001.
Investigators said they had been unable to find "a single record spelling out the assistance Tigris provided" to AWB.
The draft and final agreement documents tendered to the commission were fake, investigators said.
In another deal AWB also inflated wheat prices it was being paid by the UN so it could pay Iraq for an apparently bogus compensation claim for iron-contaminated wheat.
AWB's senior managers knew the rebate for the contamination was illegal under the UN sanctions in force against Iraq, and inflating the wheat price to pay the rebate was a way of hiding the payment, documents tendered to the inquiry showed.
Mr Lindberg admitted he agreed to the deal during a trip to Baghdad in 2002.
On Wednesday AWB was forced to withdrawal a statement to the Australian Stock Exchange which said: "AWB itself did not make payments to the Iraqi government" and that "no one, to our knowledge, can be sure where the money went".
The inquiry’s senior counsel said the statement contradicted evidence given to the commission.