Red-faced Australian civil servants who wanted to bury the shame of commemorative mugs that misspelled US president Barack Obama's name did so - with a vengeance.

Parliament House official Bronwyn Graham told senators that 198 mugs were smashed and buried under wet concrete at a loading dock behind the building - prompting one senator to call it a "mafia-style execution" for the mugs, which had an extra "r" printed in Mr Obama's first name.

The government made 200 of the mugs to commemorate the president's planned visit to Australia in 2010, which was later cancelled. Only two were ever sold from the Parliament House gift shop...including one to the journalist who reported that the president's name had been misspelled. Mafia-style end for Australia's flawed Obama mugs.

"Due to the sensitivity associated with the mistake that was made with the president's name, the last thing we wanted was for the fragments to be found on a garbage tip somewhere," said Ms Graham.

Senator John Faulkner, who made the mafia comment, told Ms Graham and her superior, David Kenny, who had authorised the disposal: "I am not saying it was a bad idea. It is creative; I will give you that.

"You have not buried any other mistakes in concrete, have you Mr Kenny, perchance?" Mr Kenny said he had not.