Bankrupt former Health Services Union boss Kathy Jackson set up a secret account to hide the fact she was spending union funds on overseas holidays, luxury shopping and payments to politicians, a court has heard.
The union is suing its former national secretary for upwards of $2.5 million over claims she used $660,000 of members' funds for personal use.
The union's barrister Mark Irving told the Federal Court on Tuesday that Ms Jackson set up the National Health Development Account in 2003 and used it to hold union funds entirely under her control.
He said the first deposit into the account was $80,000 followed by $6500 taken in 10 withdrawals from ATMs in Las Vegas, San Francisco, Seattle, Washington and Heathrow.
"Ms Jackson was in the US at this point," Mr Irving said.
"From the beginning this was an account to serve the personal benefit of Ms Jackson."
Over six years Ms Jackson withdrew an average $5025 from the account within 48 hours of her going on personal overseas holidays, Mr Irving said.
Cash withdrawals from the NHDA account also appeared to match deposits into her personal and mortgage accounts as well as payments for a personal credit card including for $3000 spent at Bvlgari, the court heard.
Mr Irving said the NHDA account was not audited or accounted for by the union, enabling Ms Jackson to make donations to politicians and support candidates in union elections without union members knowing.
She did not declare any donations between 2003 and 2011 despite it being a legal requirement, Mr Irving said.
"Ms Jackson set up the NHDA for the purpose of avoiding disclosure. She wants to hide what she is doing," he said.
The court heard Ms Jackson was earning $170,000 a year as national secretary as well as a $63,000 honorarium from the Victorian branch.
She was also claiming $28,000 in travel expenses.
Ms Jackson, who declared bankruptcy late last month, did not face court on Tuesday.
Instead she wrote to the court to say she could not afford to be represented and that the matter was now a claim against her estate.
"I do not consider that I have any entitlement to further participate in the proceeding, nor do I intend to do so," she wrote.
The hearing will continue on Wednesday.
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