Government ministers ordered the Department of Infrastructure to reconsider a project under the $220 million regional jobs scheme, despite receiving clear advice it was not eligible.
The ineligible project was then given funding, while others recommended by the department missed out.
While the Coalition has defended its handling of taxpayer-funded sporting grant programs by saying all projects given money were technically eligible, an inquiry into the Regional Jobs and Investment Packages scheme heard how ministers intervened to get the department to re-assess a project that was clearly ineligible.
The organisation had been excluded from applying because it was a registered training organisation.
However the ministers - who had been provided with a list of every applicant, even this ineligible one, by the department - singled the organisation out and told the department to assess it anyway. This was despite the department providing advice that the project was definitely ineligible.
Further investigation showed the business had only registered as a registered training organisation so its staff could get accreditation for on-the-job training. However no other organisation was afforded such latitude.
Officials were unable to say what the organisation was or even which ministers ordered the assessment when grilled about it by the Public Accounts Committee on Friday.
Infrastructure Department deputy secretary Dr Rachel Bacon admitted did she did not even have the name of the organisation in her notes.
Deputy chair of the committee Julian Hill asked if her department could text it to her.
"I issue this as a challenge to the department that I know is watching at home. Could someone in the next 10 minutes rescue the deputy secretary?" Mr Hill said.
The information was not forthcoming.
The inquiry was sparked by an Australian National Audit Office report that last year found ministers overruled departmental advice to approve nearly $80 million worth of grants, including two projects in the ultra-marginal seat of Gilmore.
However there was also massive problems with the way the department - and the call centre it outsourced most of the assessments to - handled the program.
Claims about the job creation potential of the projects were taken at face value without any proper scrutiny, while the requirements to match government funding were waived improperly in some cases.
The committee also heard nearly half of the grant applications failed the criteria in some way.
Some applications failed to include an accountant's declaration to prove the organisation could meet its co-funding obligations.
In those cases the department went back to the applicant to seek more information, although it has admitted its record-keeping was poor.
But the Australian National Audit Office skewered the department for treating the co-funding requirements like a "box-ticking exercise".
Performance audit services group executive director Brian Boyd said a missing accountant declaration could be huge a red flag.
"If you stick to what the program guidelines said you would have, down you can potentially avoid down the track approving funding for a project which actually doesn't proceed," Mr Boyd said
The inquiry is expected to continue next week.