Bishop backtracks on Gillard allegation

The coalition will use the last week of parliament to grill PM Julia Gillard over an AWU slush fund. Source: AAP

DEPUTY opposition leader Julie Bishop has backtracked on her claim that Julia Gillard helped "hide" the creation of an incorporated entity set up by two union officials in the 1990s.

The prime minister on Tuesday accused the coalition of taking the word of a confessed fraudster and a former One Nation strategist as she faced a second question time almost entirely devoted to the establishment of the Australian Workers' Union Workplace Reform Association.

Before question time, Ms Bishop, who led the coalition attack, alleged Ms Gillard had helped conceal the controversial association by not creating a file on the advice she gave AWU office holders Bruce Wilson and Ralph Blewitt when she was employed by a law firm.

The West Australian Liberal frontbencher offered no evidence to support her allegation, despite meeting union bagman Mr Blewitt, who last week gave Victorian police statements on three AWU-related matters.

Ms Bishop confirmed she met Mr Blewitt for about 10 minutes in Melbourne on Friday but he was unable to produce any documents she "could ask the prime minister about".

As a lawyer with Slater & Gordon in the 1990s, Ms Gillard provided legal advice to her then partner, Mr Wilson, and Mr Blewitt about the incorporation of "an association" in 1992.

Mr Wilson and Mr Blewitt then allegedly used accounts under the name of the WA entity to hive off hundreds of thousands of dollars. No charges were laid despite an investigation.

They both deny benefiting financially, and blame the other.

Mr Wilson says there was no fraud on his part, nor did Ms Gillard ever benefit financially.

He admitted seeking legal advice from Ms Gillard, who he said advised the pair on how to register the association after he encountered "technical problems" during his own attempts.

He feels bad Ms Gillard is repeatedly grilled about the matter blaming it on a group of people want to do damage to the prime minister.

"I feel sorry for her that she has to go through it, it is just not warranted," he told the ABC 7:30 report on Tuesday.

Ms Gillard has denied any involvement in the association beyond giving advice that was so "low level" she didn't charge for it or open an in-house file.

Ms Bishop told reporters on Tuesday morning the "unauthorised association" breached WA law and AWU internal rules.

"The reason she didn't open a file within Slater & Gordon - a file that would have shown a new legal entity was set up - was because she and Wilson and Blewitt wanted to hide from the AWU the fact that an unauthorised entity was being set up," Ms Bishop said.

Asked later about her claim, Ms Bishop backtracked.

"There are only two members of the association - she wasn't a member of the association," she told reporters after question time.

"Wilson and Blewitt ... are the ones who benefited from the slush fund."

Asked directly whether she was alleging Ms Gillard was a knowing party to fraud, Ms Bishop said: "I still have questions to ask of the prime minister."

Mr Wilson said Mr Blewitt was the only one with access to money - adding Mr Blewitt used to bury it in packages in his garden.

"How do I know that? He confessed at some stage and he also showed me a package of money that he ... had been destroyed (by moisture)".

Mr Blewitt told Sky television's Showdown program he constantly took money out of the fund but didn't keep it. He says he had no idea what happened to it because he gave it to Mr Wilson.

Ms Gillard told parliament the opposition's attack was based on a false premise.

She said the establishment of the association was not secret, because it was advertised for public comment in the West Australian newspaper public notices section in March 1992.

She also said Ms Bishop was relying in part on an discredited affidavit drafted by former One Nation figure John Pasquarelli on behalf of former AWU Victorian branch president Bob Kernohan.

Former AWU official Bill Shorten, who is mentioned in the affidavit, has dismissed it as false.

Cabinet minister Anthony Albanese compared Ms Bishop's meeting with Mr Blewitt to the Godwin Grech affair which led to the downfall of Malcolm Turnbull as opposition leader in December 2009.

Mr Albanese said Ms Bishop was "meeting with a scumbag to try and bring down a prime minister" and that her position was untenable.

Mr Abbott praised the efforts of Ms Bishop at a joint parties meeting, telling colleagues the prime minister's "lack of integrity" went to the heart of the Labor government.

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