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Brothel owner testifies in Thomson case

Former MP Craig Thomson would have needed bank authorisation to use his union-issued credit card to pay for sexual services, a Sydney brothel owner has told the court.

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Craig Thomson's half-brother has taken the stand for the prosecution in the former federal MP's fraud and theft trial.

Struan Robertson, whom Mr Thomson previously nominated as a key witness to back up his claims he was being set up by rivals, gave evidence at Melbourne Magistrates Court on Monday afternoon.

Craig Thompson leaving the Melbourne Magistrates court on Monday 20 January 2014.

Craig Thomson leaving the Melbourne Magistrates court. Photo: Luis Enrique Ascui

Mr Robertson, a national liaison officer with the Health Services Union from 2003 to 2007, said he had been issued with a credit card and was guided by what he considered reasonable constraints on what he could use the card for.

He said he never used the card for personal expenses, had twice paid for flights so his partner could attend union events, had occasionally paid for businesses lunches and was almost certain his card would not let him withdraw cash, ''not that I ever tried to do it''.

Mr Thomson is accused of using HSU credit cards and a Flight Centre account to accrue more than $28,000 of personal expenses, including sexual services from escort agencies, in-house adult films in hotel rooms, flights and cigarettes for his then wife during his term as the union's national secretary from 2002 to 2007.

Rosemary Kelly union official attending Magistrates court lonked to politician Craig Thompson saga, on Monday 20 January 2014.

Union official: Rosemary Kelly. Photo: Luis Enrique Ascui

Earlier in the summary trial on Monday, brothel owner Peter Lazaris told the court Mr Thomson would have needed his union-issued credit card to be authorised by a bank before he could have paid for sexual services.

Mr Lazaris said customers at his Sydney business, A Touch of Class, could use credit cards so long as their authenticity could be confirmed with the bank beforehand, and they provided photo identification if they appeared in person.

A credit card statement outlining the payment of $660, for two hours of sexual services, on August 26, 2006 was tendered to court.

Peter Lazarus brothel owner attending Magistrates court lonked to politician Craig Thompson saga, on Monday 20 January 2014.

Brothel owner: Peter Lazaris. Photo: Luis Ascui

Mr Lazaris said ''Staff call'' - the merchant name on customers' credit card statements instead of the name of the brothel - appeared on the statement of one of the cards issued to Mr Thomson by the HSU.

Mr Lazaris said the financial records and footage of customers entering his brothel were destroyed after six years.

Mr Thomson, 49, has pleaded not guilty to 145 fraud and theft charges.

Prosecutors allege Mr Thomson continued using union funds for personal expenses after he left the HSU in December 2007 to take up his role as the Labor member for the NSW seat of Dobell. He lost his seat, standing as an independent, in last year's federal election.

On Monday the court also heard that Mr Thomson had a HSU credit card that not even a member of the union's financial committee was aware of.

Rosemary Kelly said she only learned of a Commonwealth Bank Mastercard supplied to Mr  Thomson when an exit audit of his term was conducted in 2007. Ms Kelly said she was surprised to learn Mr Thomson had the credit card when told by Ian Dick, the union's national auditor.

The court heard Mr Dick's audit revealed irregularities in Mr Thomson's expenditure when he was national secretary, and that members of the national executive pushed for further investigation.

Ms Kelly said she did so because she had concerns ''there may not have been action taken to bring Mr Thomson to account''.

Ms Kelly said the union's financial committee met on an ''ad hoc basis'' and that it was not provided with detailed information about the union's funds by Mr Thomson.

She said Mr Thomson had the capacity to approve any expenditure up to $50,000 without specific details, and that on one occasion she asked him if he had granted himself a pay rise, after she learned there was a $120,000 difference in salaries at the national office from the 2008-09 financial year to the previous year.

Ms Kelly and Lloyd Williams, now the union's national president, both told the court that HSU officials were not permitted to use union credit cards for personal expenses.

Both said they would expect card holders to reimburse the union as quickly as possible if they did use the cards for personal expenses.

The trial, before magistrate Charlie Rozencwajg, continues.

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