[Exim] local delivery problem

Hi, I have just setup exim 4.2 on redhat 9, and i'm having problems with
simple local deliveries.

the error I'm getting is "message: failed to expand
"${lookup{$local_part}lsearch{{/etc/aliases}}": failed to open {/etc/aliases
for linear search: No such file or directory"

seems it cannot find /etc/aliases but its there, here is output from:

exim -d -bt postmaster

Exim version 4.20 uid=0 gid=0 pid=13082 D=fbb95cfd
Berkeley DB: Sleepycat Software: Berkeley DB 4.0.14: (November 18, 2001)
Support for: IPv6 PAM TCPwrappers OpenSSL
Authenticators: cram_md5 plaintext spa
Routers: accept dnslookup ipliteral manualroute queryprogram redirect
Transports: appendfile/maildir/mailstore/mbx autoreply lmtp pipe smtp
changed uid/gid: forcing real = effective
uid=0 gid=0 pid=13082
auxiliary group list: <none>
configuration file is /etc/exim/exim4.conf
log selector = 020d99d8
trusted user
admin user
originator: uid=0 gid=0 login=root name=root
sender address = root@???
Address testing: uid=0 gid=93 euid=0 egid=93
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Testing postmaster@???
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Considering postmaster@???
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
routing postmaster@???
--------> dnslookup router <--------
local_part=postmaster domain=venus.navion.com.au
checking domains
venus.navion.com.au in "@"? yes (matched "@")
venus.navion.com.au in "! +local_domains"? no (matched "! +local_domains")
dnslookup router skipped: domains mismatch
--------> system_aliases router <--------
local_part=postmaster domain=venus.navion.com.au
calling system_aliases router
rda_interpret (string): ${lookup{$local_part}lsearch{{/etc/aliases}}
search_open: lsearch "{/etc/aliases"
system_aliases router: defer for postmaster@???
message: failed to expand "${lookup{$local_part}lsearch{{/etc/aliases}}":
failed to open {/etc/aliases for linear search: No such file or directory
postmaster@??? cannot be resolved at this time:
failed to expand "${lookup{$local_part}lsearch{{/etc/aliases}}": failed to
open {/etc/aliases for linear search: No such file or directory
search_tidyup called
>>>>>>>>>>>>>>>> Exim pid=13082 terminating with rc=1 >>>>>>>>>>>>>>>>

any help would be very much appreciated..
Joe