A departmental official has been stood down while under a code of conduct investigation over the payment of $33 million for land valued at $3 million near the future Western Sydney Airport.
The department boss agreed that it also "looked like" there had been an attempted cover up of what happened with the sale of the land.
The Australian Federal Police is investigating the deal, among four different investigations that have been set up following a damning audit report that found the government paid more for the land than was proper and aspects of the sale fell short of ethical standards.
Simon Atkinson, Secretary of the Department of Infrastructure, Transport, Regional Development and Communications, faced a grilling at Senate estimates on Monday, agreeing that it looked as if people in his department tried to cover up what had happened with the land sale.
Mr Atkinson said he was "deeply concerned" by the behaviour within his department, which is why he had initiated a number of inquiries off the back of the audit report.
He agreed with Labor Senator Penny Wong that it appeared departmental officials had tried to cover their tracks when the Australian National Audit Office began asking questions about the sale of the land.
"I'm trying to clean it up," said Mr Atkinson, who was not secretary of the department at the time of the sale of the land.
"I want to get to the bottom of what happened, which is why I've pulled in an independent auditor of my own so I can get to the bottom of the facts," he said.
Mr Atkinson referred the matter to the Australian Federal Police on October 8, to find that it had already been referred by the Australian National Audit Office through its processes.
Following the receipt of a draft version of the audit report, Mr Atkinson said he initiated two code of conduct investigations, a further external audit of the conduct of the Leppington Triangle transaction, and an independent review of the Western Sydney unit's processes, culture, capabilities, and systems.
The hearing also revealed it was a mid-level public servant in the accounting department who realised the land had been over-valued when it was bought by the department.
As part of regular activities preparing the annual financial statements for the department, the value of all assets is re-assessed, which led an EL2 officer to raise the alarm that the land, that had been bought for $33 million, was worth closer to $3 million.
Around 90 per cent of its value was then written off by the department.
There is a separate code of conduct investigation into a departmental official for failing to properly manage a declared conflict of interest.
The federal government paid 22 times more per hectare than the NSW government spent on its portion of the land.
The audit found property owner Leppington Pastoral Company had suggested to the government the name of a valuer, which was agreed to by the department.
Deputy Prime Minister Michael McCormack, who is also infrastructure minister, insists the purchase was a bargain for taxpayers.
The department secretary said he wasn't aware of any evidence to support that claim but noted it was hard to determine if a compulsory acquisition would have cost more or less.
- With AAP