The Construction, Forestry, Mining and Energy Union has written to NSW and Victorian police asking them to investigate alleged corrupt and criminal behaviour.
It was revealed on Tuesday that a lucrative contract at Sydney's Barangaroo South project was granted to a labour hire company run by George Alex, who has known links to criminal and bikie gangs.
It's alleged the contract was granted after intervention by corrupt CFMEU officials.
There have also been allegations from a CFMEU whistleblower that he received death threats and was offered a $300,000 bribe, sourced from union members' money, to leave quietly.
Rejecting government suggestions that an investigation into the matter could form part of a larger royal commission into unions, Australian Council of Trade Unions president Ged Kearney said that police had been asked to investigate.
"(Prime Minister) Tony Abbott, by suggesting that we need a royal commission because of these allegations is absolutely absurd," she told reporters in Sydney.
"Taxpayers' money will be wasted. $100 million will be spent on what is nothing more than a political witch hunt."
The ACTU "fully supports" the CFMEU leadership and if
any allegations are proved to be true wrongdoers would be dealt with "accordingly through the law", she added.
Ms Kearney said Mr Abbott was trying to divert attention "from the fact that his government has no policies that will actually help workers".
Re-establishing the construction watchdog, the Australian Building Construction Commission, wouldn't do anything more than hinder unions, she said.
Her comments were echoed by ACTU Secretary Dave Oliver, who told ABC radio a royal commission was a witch hunt.
Mr Oliver said a building industry royal commission was part of a coalition plan that began after the 2007 election campaign when the union movement campaigned on workers' rights.
"From that day onwards Tony Abbott and his government have had the trade union movement in their sights and they are determined to disempower the movement."
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