Mr Howard and Trade Minister Mark Vaile have been drawn into an inquiry investigating deals between Australian companies and the regime of former Iraqi dictator Saddam Hussein under the United Nations oil-for-food program.
The two politicians reportedly asked AWB to keep them informed over its trade with Iraq just before its chief executive negotiated the deal with Saddam Hussein's regime, new documents show.
A letter from Mr Howard to AWB managing director Andrew Lindberg was released, along with scores of other documents, by the Cole inquiry, Fairfax newspapers reported.
In the letter dated July 27, 2002, after Iraq threatened to cut wheat exports from Australia, Mr Howard told Mr Lindberg: "In view of the importance of the matter, I suggest the government and AWB Ltd remain in close contact in order that we can jointly attempt to achieve a satisfactory outcome in the longer term".
Shortly afterwards, Mr Lindberg and other AWB staff, along with Department of Foreign Affairs and Trade (DFAT) officials, visited Iraq.
The inquiry has been told that during that visit, Mr Lindberg agreed to pay US$2 million (A$2.7 million) to the Iraqis that was to be disguised in an inflated wheat contract.
In November 2000, Trade Minister Mark Vaile wrote to then AWB chairman Trevor Flugge urging him to "maintain a close dialogue" with his office and with DFAT officials.
PM denies wrongdoing
But Mr Howard has denied opposition claims that writing the letter implies he knew about the illegal kickbacks to Saddam’s regime.
Mr Howard said it was his job to promote wheat sales in the lucrative market.
"We were in no way involved with the payment of bribes. We didn't condone them, we didn't have knowledge of them, but we did work closely with AWB," he told ABC Radio.
"I make no bones about that. I had no reason to believe that AWB Ltd wasn't just going all out to preserve Australia's wheat sales to Iraq,” he added.
Opposition foreign affairs spokesman Kevin Rudd has called for the Cole inquiry to be widened to include an investigation into the government's role in the scandal.
The inquiry has already been given evidence showing the government, through DFAT and its mission to the United Nations in New York, was warned AWB was engaged in behaviour that went against UN sanctions.
The inquiry, headed by Terence Cole QC, was established after a UN investigation found the AWB paid almost A$300 million in kickbacks to Saddam's regime under the UN oil for food program to secure A$2.3 billion in wheat contracts.