A former education department official has admitted stealing thousands of dollars from Victorian public schools to pay fake wages to his sons.
Former state education department finance manager Nino Napoli says he used money from "banker" schools to pay more than $125,000 in wages over seven years, the Independent Broad-Based Anti-Corruption Commission heard on Tuesday.
Mr Napoli says he realises it was "irresponsible and stupid", and now has views on how the commission can stop others doing what he did.
One son, Ralph, received more than $100,000 for work that either was not done or was volunteer work, while his brother Matthew received more than $25,000.
Mr Napoli said neither son knew where the money was coming from, and he had lied to protect them and his wife Josie.
He admitted to trying to persuade Ralph to lie to the commission about the money and work.
That conversation resulted in a heated argument, secretly recorded by IBAC investigators.
"You are delusional and the more you lie to yourself, the more you believe your own f***ing lies," Ralph tells Mr Napoli on the recording.
Mr Napoli responded by asking Ralph who he thought was going to "catch" him.
Secret recordings were also played of conversations between Mr Napoli and Michael Giulieri, the former principal of Essendon North Primary School, which was one of Mr Napoli's banker schools.
Banker schools receive funds from other schools or the education department to support programs such as specialist teachers.
IBAC is investigating claims 17 companies linked to Mr Napoli and nine of his relatives received more than $2.5 million from those funds between 2007 and 2014, through invoices for goods and services that were not provided.
There were criteria for selecting a banker school, including being mates with the principal, Mr Napoli said.
He said banker school funds paid for his wife Josie and the wife of the department's former acting secretary Jeff Rosewarne to accompany them on an overseas holiday.
The money was initially paid by Mr Napoli's brother-in-law Ralph Barber, who sent inflated invoices through his company Four Diegos.
Mr Napoli said he asked his cousin, Carlo Squillacioti, to pay for Mr Rosewarne's 50th birthday party.
He said an inflated invoice sent to a school was one of the ways Mr Squillacioti could have recouped the money.
Mr Napoli admitted inflated or false invoices were sent directly to schools to avoid his bosses finding out.
He will continue giving evidence on Wednesday.
