Bronwyn Graham with the Department of Parliamentary Services told the hearing Monday 200 mugs were made for President Barack Obama's 2010 visit the country, but they were pulled from the gift shop after a journalist purchased two of the cups and pointed out the president's name was misspelled as "Barrack," The Sydney Morning Herald reported Tuesday.
Graham said the remaining mugs were broken into pieces and mixed in with concrete used for construction projects on the Parliament House loading dock.
"The last thing we wanted was for the fragments to be found on a garbage tip somewhere," Graham said.
Sen. John Faulkner with the Labor party described the disposal as a "mafia-style execution."
"You haven't buried any other mistakes in concrete, have you, Mr. Kenny," he asked David Kenny, deputy secretary of the department.