A $250,000 settlement for workers who were underpaid at the Peter MacCallum cancer hospital was used by the Health Services Union under Kathy Jackson to kick-start a ''slush fund'' that allowed her to use the money for her political and personal purposes, an inquiry has been told.
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Evidence to the royal commission on trade unions from the former HSU No. 3 branch book-keeper, Jane Holt, detailed how $284,500 was transferred from the HSU into Ms Jackson's fund, the National Health Development Account (NHDA).
A former member of the union's committee of management, Kate Wilkinson, told the royal commission the committee passed a resolution approving the ''earmarking of the Peter Mac money'' as a fund that could be spent by Ms Jackson on a ''discretionary basis for union purposes''.
That included ''advancing the industrial and political interests of the union''. It also authorised Ms Jackson to spend it for ''her own personal purposes'' as she was not getting sitting fees for committee meetings.
Ms Jackson was later back-paid those fees.
Ms Holt's evidence detailed 18 separate payments into the ''slush fund'' from 2004 to 2010. She said she was told by Ms Jackson, the branch secretary, to make the payments.
Ms Jackson (below) rose to national prominence as a whistleblower on widespread corruption at the HSU involving former senior officials Michael Williamson, now in jail, and Craig Thomson, a disgraced former head of the union and former ALP federal MP.
She has won the backing of senior Coalition figures including Prime Minister Tony Abbott, who dubbed her ''heroic''.
Ms Holt said the payments into the fund were sporadic and the requests from Ms Jackson ''were almost always, if not always'' verbal.
''There was no real pattern to when I would be instructed by Ms Jackson to pay money into the NHDA or the quantum of the amount transferred on any one occasion.''
The first payment from the Peter MacCallum settlement - described by Ms Holt in the hearing as a ''windfall'' - was $80,000 in 2004.
It is unclear why all the money was not repaid to the underpaid Peter MacCallum workers.
Outside the hearing, Ms Jackson said the use of the money was ''a matter for the branch committee of management, not the media''. She declined to answer further questions and accused journalists ''of pumping this up''.
The current secretary of Ms Jackson's former branch, Craig McGregor, said members should have got their money back. ''I think there are many questions to answer about that issue.''
Mr McGregor said it should have been easy to return the $250,000 to members. ''If it's an underpayment to members, the members should have received the money, I believe.''
Ms Wilkinson said she did not know why the $250,000 settlement went to the union.
She said her best recollection was it was because the under-payments had been going on for a long time ''making it impossible to pay back all the money to the employees''.
She said she had been unaware of the NHDA until its existence was revealed by The Age in April.
The hearing also heard that Ms Jackson had received at least $48,000 in back-payment for attending meetings and also for combining two roles at the union for a three-year period.
Mr McGregor was grilled by counsel assisting the royal commission Jeremy Stoljar over his allegations of misconduct by Ms Jackson when she ran the branch.
Mr Stoljar said Mr McGregor had failed to adequately contact the people involved before he made his allegations and questioned his decision to speak to journalists about them.
Mr McGregor's statement detailed the reimbursement by the union of spending from Ms Jackson of more than $1 million from two of her personal credit cards. He also detailed payments made from the union to a company, jointly owned by Ms Jackson, called Neranto No. 10, for ''industrial services''.
Ms Jackson said outside the hearing the allegations were ''pure speculation by McGregor''.
