Controversial union leader Kathy Jackson has accused her former friend Bill Shorten of being involved in Labor Party branch-stacking saying she had discussed the practice with the now Opposition Leader.
Ms Jackson told the royal commission into trade union corruption that she had told Mr Shorten she had used union funds to give $7000 to Melbourne ALP figure David Asmar.
Mr Shorten, she said, laughed and said he had also recently given money to Mr Asmar and allegedly told Ms Jackson ''the bastard must have double dipped''.
Mr Shorten and Ms Jackson were once political allies but are now bitter enemies.
A spokesman for Mr Shorten said Ms Jackson's claims are untrue.
"As Mr Shorten has previously said, this royal commission provides the platform for all sorts of people to try to settle old scores and make wild claims. He won't be providing a running commentary every time someone mentions his name to try to get themselves on TV."
It comes as Ms Jackson admitted that a slush fund - started through a $250,000 settlement from back-pay owed to cancer workers - was used by her to back Labor candidates, on ''various'' union elections and for her own use.
In written evidence to the commission, Ms Jackson defended using the "windfall" 2003 settlement with the Peter MacCallum cancer hospital to set up her "slush fund", the National Health Development Account (NHDA).
Ms Jackson said the HSU No. 3 branch committee of management agreed to set up the fund, of which Ms Jackson was the sole operator, and allowed her to spend it at her discretion to advance the interests of the union.
It also allowed her to spend $4000 a year "for my own personal benefit" as she had not received sitting fees from the meetings, Ms Jackson said.
She said she "did not utilise the full amount" that she was allowed to spend but her statement did not detail how much she spent on herself.
"Any allegation that I took any of the NHDA money for my own benefit without approval is false."
Ms Jackson alleged the financial records of the NHDA, contained in an exercise book, had been stolen after her office was "ransacked" in 2011 while she was a patient in a psychiatric hospital.
Ms Jackson said a flood in March 2010 resulted in the loss of many documents and an office clean-out five months later when she was overseas resulted in a large number of documents being thrown away.
Ms Jackson broke down during Wednesday’s hearing when she described the stress she experienced as a whistleblower at the HSU, which led to her being hospitalised.
She also defended her spending on personal credit cards. The current secretary of Ms Jackson’s former Victorian branch, Craig McGregor, in a statement to the royal commission, said more than $1 million was reimbursed from the union to two personal credit cards of Ms Jackson.
In her statement, Ms Jackson said she had three union credit cards in her name and that all credit card spending by staff was in her name including travel and accommodation.
"I say that the total amounts charged to credit cards each year for the whole of the No. 3 branch expenditure by credit card, which was well under 10 per cent of total expenditure of the No. 3 branch, is unremarkable."
Ms Jackson 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. Thomson is on bail pending an appeal against his conviction and sentence on multiple fraud charges.
In evidence she said Williamson was living an "obscene millionaire's lifestyle" in a "palatial" holiday home that far exceeded his income before he was convicted of fraud.
Her suspicions of Williamson's corruption "crystallised" when she visited Williamson's new holiday house in Brightwaters, Lake Macquarie, in January 2011.
Ms Jackson said she understood Williamson had a personal loan of about $2.1 million.
"I considered that the interest accruing on that loan size, alone, would have equalled almost the totality of his then income," she said.
The holiday home overlooked a lake and was fitted with hardwood parquetry floors, four European fridges and high-end audiovisual units, according to Ms Jackson. She said Williamson had plans to build an in-ground swimming pool, cabana and to buy a boat.
In her written statement, she said since she had exposed corruption she had been called "Judas", a "Liberal prostitute" and "traitor", and suffered "smears" on the internet and in the mainstream media.
She also claimed Williamson, a former Labor national president, twice offered her a seat in Parliament, in 2010 and 2011.
The story HSU's Kathy Jackson accuses Bill Shorten of Labor branch-stacking involvement first appeared on The Sydney Morning Herald.