A police anti-corruption taskforce is investigating the possibility that a secretive $250,000 payment from the Peter MacCallum cancer hospital to Kathy Jackson's old union in 2003 was a bribe.
Fairfax Media understands that a joint police Taskforce Heracles, which was set up by as part of the Royal Commission into union corruption, has interviewed health industry figures with knowledge of the 2003 deal between the hospital and Health Services Union.
The conduct of both Ms Jackson, who has been accused of corruption, and senior hospital identities from the time, are subject of the inquiries, with evidence being gathered by the taskforce.
The $250,000 payment to the HSU No. 3 branch is especially contentious because it was used to settle a pay dispute in which scientists were owed, but did not receive, more than $3 million in back pay owed to them. At the time, the Victorian Department of Human Services wrote to the hospital advising it against the payment.
Last year Fairfax Media revealed the Peter MacCallum board also received legal advice in 2003 warning that the hospital risked serious criminal sanction under the Crimes Act because the $250,000 payment to the HSU could be deemed a secret commission - or bribe - if not disclosed to staff.
Anyone who corruptly gives or receives a secret commission faces a possible jail sentence of up to 10 years.
Despite the legal concern, the payment was made. It helped settle a dispute over back pay that resulted in about 150 research scientists agreeing to forgo $3.16 million in back pay. The scientists had been warned they could lose their jobs if they did not give up their right to the back pay.
Lawyers have told Fairfax Media that, crucial to the question of whether a secret commission was paid, was the intent of the hospital and whether the payment was disclosed to scientists. Several scientists have told Fairfax Media it was not.
Evidence to the Royal Commission shows that Ms Jackson used the $250,000 as seed money for a bank account she personally controlled. Ms Jackson has said she had authorisation from her branch committee of management for the spending.
She later spent thousands of it on herself, including on international travel, at David Jones and fashion boutiques, and in a $50,000 payment to her former husband, Jeff Jackson, a former secretary of the HSU No.1 branch.
The hospital this week declined to comment on the police investigation.
On Tuesday Ms Jackson reiterated to Fairfax Media that her Peter MacCallum members knew about the payment.
She said she recalled attending a meeting at the Peter MacCallum auditorium where staff were briefed about a proposed agreement with hospital management, including about the payment to the union. "The management knew about it, the staff knew about it, the union knew about it. There was a meeting, it was voted on."
She denied knowledge of the current investigation and said she had not been interviewed by Taskforce Heracles.
Former hospital chair Heather Wellington told the royal commission last year she believed the payment had been disclosed to staff but she was unable to provide documentary evidence to support her testimony.
Health industry sources say Taskforce Heracles - made up of senior Victorian and federal detectives - has also made inquiries about what Ms Jackson did with the $250,000, pointing to an investigation of possible fraud and theft.
Also under scrutiny by the anti-corruption taskforce is Ms Jackson's use of union credit cards to spend hundreds of thousands of dollars, as well as large cash withdrawals from HSU accounts.
Police declined to comment when asked about the investigation. Ms Jackson has experienced a dramatic decline in her reputation after being feted by the Abbott government as a heroic whistleblower, even receiving an apology from federal parliament in early 2014.
Now she is subject to detailed and serious corruption claims. She is currently awaiting judgement in a civil case brought against her by her former union, which has alleged she stole or misspent about $1.4 million.
Just before the civil trial started Ms Jackson dramatically declared bankruptcy and did not appear. A decision in the Federal Court from Justice Richard Tracey is expected soon.
