Victorian government minister Luke Donnellan has resigned from cabinet after he was accused of branch-stacking in an operation led by former Labor powerbroker Adem Somyurek.
Federal MP Anthony Byrne on Monday told an anti-corruption inquiry that both he and Mr Donnellan paid other's Labor memberships, in a breach of party rules.
In a statement, Mr Donnellan, who holds the portfolios of child protection, ageing, disability and carers, confirmed he "previously breached party rules while a minister".
"But let me be very clear: I never misused public funds or resources in any way. And this has absolutely nothing to do with my staff," he said.
"However, I don't believe it is possible or appropriate to maintain my ministerial responsibilities given these rule breaches. The work to support vulnerable Victorians is too important, especially during the pandemic."
Mr Byrne was the first witness at the Independent Broad-based Anti-corruption Commission's first public hearing into allegations of branch stacking by Labor MPs and their taxpayer-funded staff.
Secretly-recorded tapes of disgraced Labor powerbroker Adem Somyurek, which triggered IBAC's investigation, were filmed in Mr Byrne's Holt electorate office in Melbourne's outer southeast.
The duo were close allies and in Labor's moderate faction but fell out in 2019, partly due to Mr Byrne's branch stacking concerns.
"The party was completely out of control. I saw things and heard things that I didn't think I'd ever see in a modern Labor party," he told the inquiry.
"I'm referring to branch stacking, I'm referring to coercion of staff being made to do things they didn't want to do. I was referring to the party being taken over by one person whose sole objective was power and power alone."
Asked by counsel assisting the inquiry Chris Carr SC who he meant, Mr Byrne replied: "Adem Somyurek".
He said he observed Mr Somyurek and state Labor MP Marlene Kairouz coercing staff to do factional work during paid hours "to the exclusion of just about anything else".
He said Mr Somyurek threatened to "take people out" of pre-selections, including minister Gabrielle Williams and Cranbourne MP Pauline Richards, and reward others for their stacking efforts, including the upper house's Kaushaliya Vaghela.
Branch stacking involves recruiting or signing up members to a political party's local branch to influence parliament candidate preselections.
It is not illegal but is against Labor party rules to pay for other's memberships.
Mr Byrne admitted paying for other's memberships since he was elected in 1999, in a "well-entrenched" model.
He spent about $10,000 in the past five years, including using cash raised at fundraisers taken from a kitty kept in his office.
Mr Byrne said Mr Somyurek and Mr Donnellan would have spent "roughly the same amount, perhaps more in the past couple of years" on Labor memberships.
Both Mr Somyurek and Mr Donnellan once worked in Mr Byrne's electoral office.
Premier Daniel Andrews, from the socialist left, ordered the investigation in June 2020 after an expose by The Age and 60 Minutes.
Mr Somyurek quit Labor before he was expelled but retained his upper house seat, while factional allies Robin Scott and Ms Kairouz resigned from cabinet. All three deny stacking allegations.
The IBAC hearings, part of a joint investigation with the Victorian Ombudsman dubbed Operation Watts, will go for five weeks and also examine allegations taxpayer money intended for community associations was misused for party-political work or other improper purposes.
The scandal prompted reform of the Victorian Labor Party, including the expulsion of about 1800 "non-genuine" members and the suspension of voting rights of all other members until 2023.
