Public school funds were used to pay for an overseas holiday after a consultant inflated an invoice to the Victorian education department by $9000 at the behest of a schools finance officer.
The travel costs were incurred by the wife of the department's deputy secretary Jeff Rosewarne, a man previously responsible for overseeing the government's Black Saturday bushfire response.
On Tuesday, Ralph Barba told an inquiry his brother-in-law Nino Napoli asked him to issue the fake invoice in 2009.
The Independent Broad-based Anti-corruption Commission (IBAC) is investigating claims that 17 companies linked to Mr Napoli, the education department's schools finance manager, and nine of his relatives received more than $2.5 million from Victorian schools between 2007 and 2014.
Mr Barba is director of Four Diegos, an education, media and sports consultancy. He was also involved with this year's Asian Cup soccer tournament.
His sister, Josie, is married to Mr Napoli.
The former SEN 1116 sports radio producer said he was working on football projects for the education department when he sent an invoice to Mr Napoli in 2009.
"He asked me to inflate the third invoice by the costs of Jeff Rosewarne's wife's travel costs ... some $9000," Mr Barber told the inquiry.
"It shocked me."
But Mr Barba agreed to falsify the invoice for his brother-in-law.
"It was the biggest mistake of my life but I did it," he said.
Mr Barba says he distanced himself from Mr Napoli when he received a summons to appear before IBAC.
However, the hearing on Tuesday was played an audio recording of Mr Barba discussing with his sister and Mr Napoli the money he had "billed" the education department.
The recording from May 2014 was played after counsel assisting the inquiry Ian Hill, QC, asked Mr Barba whether he had discussed the IBAC investigation in detail with Mr Napoli, or his sister.
Mr Barba said he hadn't.
In another secretly taped conversations from November last year Mr Napoli is also heard discussing how they should attribute other funds and plans to shred documents in the taped conversation.
Earlier on Tuesday Mr Napoli's brother, Robert, denied the schools finance manager had helped his printing business get work with the department of education.
He also told the IBAC hearing he advised his brother not to hide invoices in the roof of their mother's house.
"I was not involved in the hiding of them," said Mr Napoli.
"I didn't want anything to do with it, it was his idea."
Mr Rosewarne went on to work as a director with Victoria's Catholic Education Office after leaving the department, but a spokesman for the office told AAP on Tuesday he resigned a couple of weeks ago.
And the executive director of the Royal Children's Hospital Education Institute, Glenda Strong, resigned last Wednesday after the IBAC inquiry heard the institute received money from a school.
The hospital has engaged an external firm to audit the institute's finances.
Sacked senior education department official John Allman has also resigned his role on the hospital's Education Institute board.
The hearing has been adjourned until Wednesday.
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