The royal commission into union corruption is expected to scrutinise a loan the NSW Electrical Trades Union made to the Labor Party five years ago.
The commission will on Monday call more than 30 witnesses to give evidence about the activities of the ETU. The witnesses will include the NSW ETU's secretary Steve Butler, former secretary, Bernie Riordan and lawyer Bob Whyburn.
"The Trade Union Royal Commission intends to investigate an investment made by the NSW branch of the Electrical Trades Union almost five years ago, which involved a commercial loan to the NSW Labor Party," Mr Butler said.
"On assuming the position of secretary in July 2012, I immediately ordered a review of this matter to ensure proper internal processes had been followed and that the rules of the union had been complied with.
"The review reported that the loan was an investment decision, the rules of the union were complied with and the loan was properly made."
Mr Butler said the loan to the NSW branch of the Labor Party was repaid in full in 2013, including more than $100,000 in interest. He said it was not unusual for unions to invest members' money to generate returns to support union activities.
"The ETU was one of three unions to extend loans to NSW Labor in 2010/11, all of which were agreed to on commercial terms with interest payable and fully disclosed in financial accounts," he said.
"One must remember that trade unions founded the Labor Party more than one hundred years ago as the political voice of working people, and we continue to enjoy a close working relationship with the Labor Party to achieve our goal of improving the lives of working people.
"Under my leadership I have always acted in the best interest of ETU members. It is disappointing that these matters are being investigated, but despite this the ETU has committed to assisting the commission during its inquiry."
Mr Butler said any questions about the actions of former office holders "were best addressed by those individuals".
The Gillard government appointed Bernie Riordan a commissioner of Fair Work Australia in 2012, a day after long-running legal action against him was withdrawn.
Mr Riordan, who is also a former president of NSW Labor, had been accused in a Federal Court case of receiving $1.8 million in directors fees from industry boards he sat on since 1998. The ETU's Victorian branch alleged those fees should have been returned to the union under union rules.
Federal Court records show that the original statement of claim was lodged in July 2011 by Victorian ETU state secretary Dean Mighell and that the case was later withdrawn.
The claim by Mr Mighell also alleged that two other NSW officials of the ETU, Neville Betts and Paul Sinclair, received $595,374 and $991,839 respectively from boards they sat on. The NSW branch of the ETU has previously dismissed the claim by its Victorian counterparts as an "ugly stunt" and a "cynical ploy" and argued the NSW branch has different rules to the rest of the ETU.
The royal commission will also call Mr Betts and Mr Sinclair as witnesses. Unions NSW secretary Mark Lennon will also be called.
The ETU hearing is expected to run until Wednesday.
The Transport Workers Union will face the commission in May, followed by the CFMEU in June.
