Moody claims Murali's action is more legal than some other bowlers playing international cricket.
''As an Australian through and through, when I have been with the Sri Lankan team in Australia, or playing against them in the World Cup, it's the only situation we find in the whole of the cricketing world where we have this disgraceful slant on a cricketer,'' Moody said.
''My take on it, and I hope I'm right, and I've shared this with Murali, is that it's Australia's nature to show that response in a way of respect and acknowledgement of someone who is pretty special and unique.
''It's a direct insult as it may be seen or heard or given. It's treading a very fine line of sportsmanship.
''I don't know if I'm right. I hope I'm right because at times I've found it incredibly embarrassing when you tour all around the world with a team that has a bowler who is a unique genius; that he's subjected to that type of behaviour in Australia,'' the World Cup winner with Australia in 1999, said.
Moody believes part of the reason for this is the competition between Murali and Australia's recently retired champion spinner Shane Warne, who is the world's leading wicket-taker with 708.
Murali is second with 674 but given the amount he bowls and the rate at which he takes his wickets he is likely to pass Warne within a year. When Murali tours Australia for two Tests in November, he will still be behind Warne.
''They're protecting their own. Australia has produced the greatest leg-spinner of all time and Australians are very proud of that,'' Moody said.
''There's that constant comparison between Warne and Murali, but I just think you cannot even begin to try and compare the two.
Many Australians, including most of the national team, have harboured suspicions about Murali's ultra-flexible action, which includes a bent elbow, apparently a birth deformity.
This exploded publicly on Boxing Day 1995 when umpire Darrell Hair called Murali seven times for throwing, creating a furore. He was subsequently called during a one-day series in Australia, which almost prompted Sri Lanka to walk off midway through a one-day match in Adelaide four years later.
Murali refused to tour Australia in 2004 because of his treatment by Australians, including Prime Minister John Howard, who sparked an international incident when he claimed publicly that science had proved Murali 'chucked'.
Any bowler now reported by umpires for having a suspect action must be scientifically tested. If found to be outside the 15-degree parameter the bowler is banned and must have remedial work with experts before being allowed to play again.
''We were incredibly alarmed and surprised about that because we thought if you're going to do that, at least do it through the management, but he felt an obligation to prove to himself that he wasn't bending the rules, so to speak,'' Moody told The Australian.
''There were articles claiming he hadn't been tested bowling at different speeds so he took himself off one morning on his day off and organised himself to get tested properly.
''He bowled the whole shooting match of doosras and toppies and offies at all different speeds and he walked away comfortably under the 15-degree parameter. There wasn't one delivery that was over.
''I've got the report that shows it all; every single delivery.
So where do you go, what else can a bloke do?,'' Moody almsot pleads.