The Victorian government has asked police and other agencies to probe a proposal for a Liberal donor to pay a party staffer's business more than $100,000 but the Opposition Leader has decried the move.
The Victorian Labor government is asking the state's electoral commission, police and corruption watchdogs, and the Australian Federal Police, to investigate after Opposition Leader Matthew Guy's chief of staff asked a donor to make the payments.
The contract was not signed but the staffer, Mitch Catlin, resigned on Tuesday.
Government Services Minister Danny Pearson said Mr Guy was compromised by his alleged involvement in the "scheme to circumvent donation laws":
"Victorians are entitled to answers about this secret deal and the Liberal Party should be demanding their leader provide them."
While conceding a code of conduct was needed for opposition staff in future, Mr Guy described the referral as a "desperate" stunt from the government to distract from its own integrity failings.
"This referral relates to an arrangement that was never agreed to, signed, or put into place.
"This is a desperate attempt from a tried, corrupt and arrogant government to distract from its own integrity failings.
"Unlike Daniel Andrews, I and the Victorian Liberals and Nationals have nothing to hide. I look forward to Victoria’s integrity agencies confirming this referral for what it is – an unfounded and desperate political stunt."
The proposed agreement, published by The Age newspaper, would have required the unnamed donor to pay Mr Catlin's marketing company Catchy Media Marketing and Management $8333 a month for "supporting business interests".
It also included a clause that would have voided the deal if Mr Catlin departed his role.
Under Victorian law, political donations above $1050 must be disclosed and are capped at $4210 over four years for individuals and organisations.
The Victorian Electoral Commission said it was aware of the allegations that political donations were potentially being disguised as alternate payments, tweeting:
"We take the regulation of political donations very seriously and have commenced preliminary inquiries into these issues."
The revelation comes as the opposition tries to talk up its integrity credentials after two probes into Labor's culture, promising to increase funding for state corruption bodies if it wins the November election.