One Nation has come under fire after a secret recording emerged of chief-of-staff James Ashby allegedly planning to profiteer from the Queensland election.

News Corp reported that Mr Ashby can said that there was an opportunity to make some money from the state election, “if we play this smart”.

While a Labor senator referred the matter to federal and state police for investigation, Senator Pauline Hanson on Monday was forced to respond to the allegations.

At a press conference standing beside Mr Ashby, Senator Hanson said that One Nation’s executive squashed the alleged plan to charge inflated prices for campaign material. Mr Ashby himself denied that the suggestion was ever a serious proposal.

The pair was forced to respond after the emergence of recordings, obtained by The Courier-Mail, which allege to have documented a conversation during a meeting attended by Senator Hanson late last year.

During the recording, Mr Ashby reportedly says promotional items, including signage, could be sold to candidates at inflated prices to potentially make money out of the election.

Mr Ashby has accused a former One Nation staff member of blackmail and says he will contact police over the leaked recording.

Queensland Labor Senator Murray Watt is so concerned about the potential for intent to commit electoral fraud, he has referred the electoral commission, Australian Federal Police and Queensland Police.

But there’s no evidence the issues raised by Mr Ashby were ever acted on. Nor is it suggested that any wrongdoing occurred.

Mr Ashby admitted he regretted his “poor choice of words” during the meeting, but denies the party has used its candidates to make money.

“They were quite clearly secret recordings, it captured some off-guard comments. There’s only one thing I regret and that’s a poor choice of words,” he said.

Mr Ashby said One Nation did not make any money from campaign materials supplied to candidates and that banners produced by his own printing company were provided at cost.

He said candidates were charged $3500 for campaign materials to ensure quality and consistency.

In an interview with the ABC on Monday, Mr Ashby said the party “never enacted” the suggestions.

“At no time have I ever skimmed,” he said.

“We weren’t being recorded … it’s betrayal. It’s one of those moments that an illegal recording was put out in the public … these were brainstorming sessions,” he said.

Mr Ashby said the “stench of blackmail” had hung over the head of One Nation for some time.

The recording

The recording obtained by News Corp reportedly features Mr Ashby discussing inflating the price of promotional items.

“I will deny I ever said this, but what stops us from getting a middle man or gracing … I am happy to grace in cash, double the price of whatever it is,” he reportedly said at the meeting.

“We say to the candidates we will fund 50 per cent of this package. So the package might be $5000. You’re going to pay $2500 and we’ll pay the other $2500 of the $5000.

“The other $2500 is the profit. It’s the fat. And I’ll write it off. I don’t want the cash for it. I will make it as a tax deduction or … ”

When asked “where” they would be making money, Mr Ashby can be heard responding:

“Because when you lodge the receipt at the full price with the Electoral Commission of Queensland you get back the full amount that’s been issued to you as an invoice.”

Senator Derryn Hinch, who claims he has heard the recordings, says he was “shocked”.

He tweeted that Senator Hanson and Mr Ashby’s claims to “plotting to screw their own candidates for money is an absolute shocker. I’ve heard it”.

“This is unconscionable behaviour, you can’t do it,” he told the Seven Network.

– with AAP