Tales of taxpayer-funded hotel rooms at the Sofitel for 20 department staff, lavish Christmas parties and attempts to subvert procurement rules surfaced at an anti-corruption hearing into alleged rorting of education funds on Tuesday morning.

Former Education Department corporate services manager Gail Hart told the hearing she was sidelined and made redundant after she raised concerns about her bosses' behaviour.

Ms Hart alleged former deputy department secretary Darrell Fraser billed taxpayers for lunches and dinners in expensive restaurants where "a lot of alcohol" was consumed. She alleged that Mr Fraser got so intoxicated at a staff retreat that he was refused service and spent the next day in bed.

Ms Hart, who worked at the department from 2002 to 2013, said its former acting secretary Jeff Rosewarne pressured her to grant exemptions to standard procurement procedures.

She said 95 per cent of expenses claims lodged by the pair came in statutory declarations, including one for a trip to China for Mr Rosewarne and his wife.

"Compliance was not occurring very often at all."

Ms Hart unsuccessfully tried to trace payments for leased cars, a conference in Tasmania and staff Christmas parties. It then became clear that money from schools was being used to pay for these things, she said.

She also raised concerns about Mr Rosewarne's proposal for Ultranet – a proposed online system to connect teachers, parents and students, and said he flouted rules by upgrading staff to business class on a flight to the UK to consult on the botched IT project.

"He could do whatever he wanted to," she said.

The Independent Broad-based Anti-corruption Commission has identified about $2.5 million in potentially corrupt transactions between 2007 and 2014, with a large amount allegedly flowing to companies owned by sacked official Nino Napoli's extended family.

The money was channelled through "banker schools", which were set up to share education funds with nearby schools.

The former principal of Parkwood and Norwood Secondary Colleges, Vincent Virtue, was also hauled before the IBAC hearing on Tuesday, where it was alleged he signed off on more than $80,000 worth of false invoices that benefited companies owned by Mr Napoli's relatives.

Mr Virtue, who was also a regional director for the department, said Mr Napoli asked him to pay the invoices. He said Parkwood Secondary was in a precarious financial situation and "he hoped there would be something left over".

Richard Bell, the director of stationary and office furniture company Office National was quizzed about allegedly issuing fraudulent invoices to Moonee Ponds West Primary School and Chandler Park Primary School. He said Mr Rosewarne asked him to organise office furniture for his house and invoice the schools.

The invoices said payment was for printing and "design and graphic of school publication".