July 17 (Bloomberg) -- Iraq's interim government denied a Sydney Morning Herald report that Prime Minister Ayad Allawi shot dead as many as six suspected insurgents before the U.S.-led coalition transferred political control to his government.

``I hear about the incident and of course, it's totally untrue,'' Hamid al-Kifai, a spokesman for Iraq's interim government, said in a telephone interview from Baghdad.

The prisoners, blindfolded and handcuffed, were killed in a courtyard in a maximum-security section of the al-Amariyah security center in a suburb of Baghdad, according to two unidentified witnesses, who were separately interviewed by the newspaper. Allawi told onlookers that the men had each killed as many as 50 Iraqis and ``deserved worse than death,'' the newspaper cited the witnesses as recounting. They said the incident happened about a week before the power handover.

Allawi then drew a pistol and shot each prisoner in the head as about a dozen Iraqi policemen and four Americans from Allawi's security team looked on, the newspaper reported. One of the witnesses said Allawi said he wanted to send a message to militants fighting Iraq's interim government, the newspaper said. As many as five of those killed were Iraqis, the witnesses told the newspaper.

Allawi's office, in a letter to the newspaper, denied the witnesses' accounts, saying Allawi had never visited the prison and that he didn't carry a gun. The allegations are rumors instigated by enemies of Allawi's government, the letter said.

Security Service

The U.S.-led coalition handed over sovereignty to Allawi's administration on June 28 in an unannounced ceremony amid a spate of bombings, 15 months after tanks and troops laid claim to Baghdad. Allawi's administration has been struggling to quell attacks by insurgents on officials and security forces in the oil- rich nation. The interim Prime Minister this week announced the creation of a new security service to help restore safety.

The Iraqi government earlier this month introduced a law to give Allawi's administration the power to impose a state of emergency to combat insurgents.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney on amacdonaldsm@bloomberg.net

Last Updated: July 16, 2004 20:13 EDT