Liberal senator Ross Lightfoot tabled a statement in the Senate today saying he did not take $25,000 cash into Iraq on a taxpayer-funded trip.
He said the only money he took was $1,000 of his own money.
News Ltd newspapers today reported Senator Lightfoot had smuggled $US20,000 into the country in January, on behalf of the Woodside Petroleum company, which was then donated towards a hospital that treats children who were victims of a chemical attack in 1988.
Senator Lightfoot said in his statement that he would later today direct his solicitors to take action against the newspapers over the claims.
He said they were not true.
"I did not take $US20,000 in cash with me to Iraq. The only money I took with me was $US1,000 of my own money for personal expenses. I have a receipt," he said.
"At no stage have I ever received nor have I carried nor have I given to the Kurdish regional government or the PUK or any agent or officer thereof $US20,000."
Senator Lightfoot said Simko Halmet, the Kurdish Regional Government representative in Australia, took the donation from Woodside into Iraq.
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Mr Halmet met up with Senator Lightfoot in Dubai, in the United Arab Emirates, and then travelled into Iraq.
Senator Lightfoot said that at a meeting with the Kurdish Regional Government Prime Minister Omar Fatah, Mr Halmet passed over the donation.
"At no stage did the money ever come into my personal possession," Senator Lightfoot said.
"I did not know until Mr Halmet gave it to the prime minister that he either had the money in his possession or was going to make the presentation at that meeting."
Senator Lightfoot used the statement to reject suggestions that he had been involved in the donation because he owned shares in Woodside.
He said he owned 875 shares in Woodside, which he bought last November and sold on Tuesday.
"I completely reject as ludicrous and offensive the suggestion that a modest holding of shares in Woodside, a major Western Australian company, which forms a small part of a much larger portfolio, in any way motivated me in my actions to assist this hospital," he said.
* There had been several billions of dollars spended since the war on terror began.
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