A Canberra builder has alleged he paid $30,000 to the wife of a union organiser because he didn't want to get on the "wrong side" of the Construction, Forestry, Mining and Energy Union.
John Domitrovic, the manager of All Kiwi Constructions, told the royal commission hearing into unions the money had been demanded by former Construction, Forestry, Mining and Energy organiser Halafihi "Fihi" Kivalu in the second half of 2011.
Mr Kivalu has pleaded not guilty to two counts of blackmail arising from admissions to the royal commission last week. Police allege Mr Kivalu accepted payments of more than $100,000 from local contractors.
Mr Domitrovic said he was working on two projects in 2011, a contract job at Flemington Road in Mitchell and a development of his own, of 50 units, for which he had borrowed $10 million, in Queanbeyan.
He said Mr Kivalu came to the Queanbeyan site and said: "I've agreed with your site supervisor, you're going to pay $60,000 cash."
Mr Domitrovic told Friday's hearing he knocked back the initial demand but at a second meeting agreed to make $30,000 in periodic payments to Mr Kivalu's wife by cheque.
The hearing was shown cheque stubs from the All Kiwi Constructions account to Mr Kivalu's wife, Halaevalu Maureen Kivalu, for $5005, $5000, $10,000 and $10,000 respectively. Bank statements, indicating the cheques had been paid into a trust account controlled by Mrs Kivalu, were also entered into evidence.
Mr Domitrovic said he was surprised Mr Kivalu made the initial demand and had not expected him to accept a cheque as they could be traced.
"[I was] somewhat surprised that Fihi agreed to take a cheque to his wife, that surprised me the most," he said.
Mr Domitrovic said he paid the money because he was afraid of stop work orders.
"It was purely a business decision for economic reasons. I was involved in one of the biggest jobs I ever did...They could have come, stopped jobs, stopped the progress and stopped . You hear these things. I didn't want to get on the wrong side of the union."
Royal Commissioner, Dyson Heydon QC, indicated Mrs Kivalu may be required to give evidence.
"Some attempt will have to be made to notify Mrs Kivalu of this morning's evidence," he said.
"Her rights in terms of questioning are reserved."
The royal commission continues.