A UNION official sent sham invoices for thousands of dollars to a construction firm for work that was never done, the first day of a royal commission into union corruption has heard.
Former Australian Workers' Union assistant secretary Ralph Blewitt has given evidence that AWU secretary Bruce Wilson - a one-time boyfriend of former prime minister Julia Gillard - established a workplace safety association to channel money into a secret account.
Mr Blewitt has flown to Sydney from his home in Malaysia to give evidence about events surrounding the 1992 establishment of the Workplace Reform Association (WRA).
He told the commission former prime minister Julia Gillard, who was a lawyer doing work for the AWU at the time, helped draw up documents to incorporate the WRA.
He said Mr Wilson told him the WRA was created ostensibly to advise on workplace safety at a major construction project being done by contractor Thiess in Western Australia.
Thiess was to pay almost $2000 a week for a full-time union representative to work on safety issues but Mr Blewitt said no work was ever done.
"We needed to raise funds for potential election campaigns in the future and this was a vehicle to raise those funds," he said.
Mr Wilson told him that no work would be done for the money, he said.
Mr Blewitt told the commission he set up a post office box on Mr Wilson's instructions to receive cheques to the WRA, which he then deposited into a Commonwealth Bank account.
An invoice for three months came to more than $25,000.
"The whole thing was kept completely secret from anybody else," Mr Blewitt said.
Mr Wilson later used funds from the WRA account to pay for a house in Melbourne, the commission heard.
Mr Blewitt, a small man with a clean-shaven head and bushy grey goatee beard, said Mr Wilson was a "charismatic" person he worked very closely with in the WA branch of the AWU.
The 70-year-old said he and Mr Wilson attended a 1992 meeting at law firm Slater and Gordon's Melbourne offices where Ms Gillard, a lawyer at the firm, was present.
The meeting was to incorporate the WRA and Mr Blewitt was asked to sign a document stating the association's main purpose was improving workplace safety.
Counsel assisting the commission Jeremy Stoljar asked Mr Blewitt if he thought the statement was true.
"I never turned my mind to it - I was just following the instructions of Bruce Wilson," Mr Blewitt said.
Former federal Labor leader Mark Latham was among those present in the hearing room.
While Ms Gillard has been notified of the proceedings, the commission has not received an application for her to appear.
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