The opposition has repeatedly called for the scope of the inquiry to be expanded to allow Commissioner Terence Cole to investigate whether the government was involved in the scandal.
AWB is being investigated over the payment of US$300 m (A$399m) in alleged bribes funnelled to the Iraqi regime through a Jordanian front company, Alia.
The Commissioner said the investigation included whether “the Commonwealth, and in particular DFAT was informed of any knowledge AWB may be found to have had regarding payments made by AWB to Alia.”
But Mr Cole said the current scope of the inquiry did not allow him to make findings of illegality against the federal government or its staff.
If he uncovered any illegal activity by the government, Mr Cole told the inquiry he would ask Attorney-General Philip Ruddock to give him extra powers.
Government has nothing to hide
Prime Minister John Howard has strongly rejected suggestions the government was aware AWB was paying kickbacks to the former Iraqi regime.
Foreign Minister Alexander Downer has maintained that no-one from his department knew that AWB was involved in the alleged payment of bribes.
The Cole inquiry yesterday heard evidence from AWB executive, Michael Long, which indicated that the government may have known about the wheat exporter's sanction busting deals.
Mr Long said that he forwarded an email to the Department of Foreign Affairs and Trade in 2003, warning of concerns about the program.
But Mr Howard has denied the government knew of any kickbacks.
"I did not know, my ministers did not know and on the information that I have been provided and the advice I have received from the Department of Foreign Affairs and Trade I do not believe that the department knew that AWB was involved in the payment of bribes," Mr Howard told the Nine Network.
He said Mr Long's email did not identify the wheat exporter as being in any way involved in the payment of kickbacks.
"The information that he passed on did not identify AWB as paying kickbacks," Mr Howard said.
"I mean you would think that was the case from some of the headlines this morning, but what he did was to pass on a general expression of concern by the Coalition Provisional Authority about the payment of bribes being involved in the overall oil-for-food program."