Former Victorian Labor minister Adem Somyurek and his political protege accused journalists of racism in an effort to stop them from investigating taxpayer-funded grants awarded to their factional allies.
Banyule Mayor Rick Garotti, who was mentored by Mr Somyurek, told the Independent Broad-based Anti-corruption Commission inquiry on Tuesday he lobbied the government to award the Somali Australian Council of Victoria (SACOV) several grants.
This included $100,000 as part of the Victorian Responsible Gambling Foundation Prevention Partnership Program in 2019, which was overseen by then minister for gaming Marlene Kairouz.
Financial records obtained by IBAC revealed SACOV received about $75,000 from the government, of which $50,000 was spent on wages and salaries, $7000 on videos, $6000 on admin and $4200 for training.
Counsel assisting Chris Carr SC told the inquiry the wages, the training costs and $4500 of the video fees went directly to the organisation's founder and secretary Hussein Haraco.
Mr Garotti and Dr Haraco were allies in Labor's moderate faction, led by Mr Somyurek, and contributed thousands of dollars annually to pay for other people's memberships in the Heidelberg branch.
The inquiry heard Dr Haraco recruited about 300 members to the Heidelberg branch over a decade, a third of whom Mr Garotti admitted were "non-genuine".
The practice, known as branch stacking, was done to boost the faction's influence and ensure preferred candidates were preselected.
It is not illegal but it is against Labor party rules. IBAC is investigating whether taxpayer funds and money intended for community associations was used for such work.
Mr Garotti admitted he helped Dr Haraco secure the grant because he was a "factional ally who ought to be rewarded for their factional activity".
When journalists contacted Dr Haraco to ask about the grants, Mr Garotti and Mr Somyurek discussed making claims of racism as a response.
"(Say) I'm sorry, but the black people at the moment are very, it's a time of high sensitivity, and I'm very sensitive and this is part of racism. Can you go that hard?" Mr Somyurek said in the secretly recorded phone conversation obtained by IBAC.
"We're talking about Black Lives Matter, it's not just the police, it's journalists as well, it's media, just go hard."
The duo also drafted an email response to a journalist on behalf of Dr Haraco.
"The Somali community is sick of journalists such as yourself accusing us of branch stacking ... is it because we are black?" the email reads.
Asked by Mr Carr if Mr Somyurek had repeatedly "used racism as cover to prevent people walking into dark corners where his secrets are hidden", Mr Goretti agreed.
The inquiry heard Banyule City Council also awarded SACOV grants totalling $430,000, of which $100,000 was misused after the community organisation "double-counted" expenses.
Mr Garotti left the Labor party in February after he was referred to its disputes tribunal for branch stacking.
He tearfully admitted he was ashamed and embarrassed by his actions but felt they were expected of him if he wanted to become a parliamentarian.
"I'm not excusing my behaviour in the party, but hopefully for a young person coming through the ranks in the future, it's a better culture and they don't get caught up," Mr Garotti said.
Mr Somyurek quit Labor before he was expelled but retained his upper house seat, while Ms Kariouz resigned from cabinet. Both deny wrongdoing.
The inquiry was expected to hear from Dr Haraco on Thursday, but he is unfit to give evidence.
The public hearings will resume on November 1.
Australian Associated Press