There was no legal impediment to a man subject to child abuse claims taking a 17-year-old boy into his personal care, a royal commission has been told.
Children's Guardian Kerryn Boland said the Commission for Children and Young People (CCYP) had been concerned in 2010-11 over a potential conflict of interest stemming from Steve Larkins' - principal officer of Hunter Aboriginal Children Services (HACS) - care of the boy.
Arrested in 2011, Larkins is now in jail for child pornography and related offences.
"The principal officer would be the one who would have responsibility for dealing with complaints to HACS," Ms Boland told the Royal Commission into Institutional Responses to Child Sexual Abuse on Wednesday.
"The principal officer's role was in relation to out-of-home care. The principal officer would make provision for foster care for children."
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HACS was a designated agency in 2003 to make out-of-home care arrangements for children in its care but regulations then changed in NSW, with small agencies including HACS given 10 years to implement the changes.
The effect of legislative changes meant that Larkins automatically had parental responsibility and did not have to have other checks.
Ms Boland said the CCYP asked the NSW Department of Community Services if they would assess the placement of children after Steve Larkins was arrested.
She told commission SC Gail Furness about major reforms including extensive checks that would spark a risk-assessment probe if someone was applying for a position similar to Larkins'.
A previous system had been "tick and flick", the commission heard.
It has emerged that Larkins forged his check.
A Hunters Children Service worker, whose evidence may be suppressed as a safeguard against possible identification of the boy in Larkins' care, told the commission he had casework responsibility for the boy in 2009.
He said Larkins would call him and say the boy, referred to as AD, needed to be picked up and taken to his house.
"I thought it was a bit strange," the worker said.
The worker did not tell anyone at HACS that Mr Larkins was overactive in AD's care.
The commission is considering the application to suppress evidence by the worker and will make a decision when it resumes on Wednesday afternoon.
