The row over alleged corruption in the construction industry has deepened after reports that a senior building union figure received free work on his house from a Melbourne builder in return for “peace” on industrial sites.

Builder Andrew Zaf told the ABC’s 7.30 program and Fairfax Media that he supplied a free roof and other materials for the home of Construction, Forestry, Mining and Energy Union (CFMEU) Victorian secretary, John Setka, in Melbourne’s western suburbs, describing the material as a bribe.

Mr Setka strongly denied the allegations, saying: “The claim there was some deal or agreement about any flow-on benefits is a blatant lie.”

Mr Zaf told the ABC supplying the roofing and materials was the cheapest option.

“Well, I had a lot of workers I had to look after. It was the cheapest way out,” he told the ABC. “I wasn’t happy about it because no-one likes to give $10,000 away, but at the end of the day it was cheaper for me to compromise myself than to risk my trucks being stopped going out to construction sites.”

Mr Zaf said the material was supplied at the request of other CFMEU officials, who “passed the hat round” because Mr Setka had broken up with his girlfriend.

It was the latest in a series of allegations to rock the construction union and led to a heated debate about corruption in the union movement, with the government again indicating it might establish a royal commission.

Unions, in turn, accused the government of running a witch hunt, with ACTU boss Ged Kearney saying any allegations were best dealt with by the police. Ms Kearney has already written to the New South Wales and Victorian police to investigate allegations into the CFMEU. She said it was “absolutely absurd” for the Prime Minister to suggest a royal commission was required.

“Taxpayers’ money will be wasted – $100 million will be spent on what is nothing more than a political witch hunt,” Mrs Kearney said.”

She backed the leaders of the CFMEU, as did ACTU secretary, Dave Oliver, who said the coalition had had unions in their sights since they lost the 2007 election.

Mr Zaf also claimed last night that he was forced by crooked CFMEU members to hire a man he called “Johnny the Greek”, the father of a senior unionist, to work on a site in Melbourne’s western suburbs, and that the man once threatened to kill him.

“Well, when someone threatens to kill you, what are you going to do?” Mr Zaf said when asked why he did not sack the union organiser’s father.

The ABC reported that an intelligence file compiled by building industry investigators shows that a developer alleged Mr Setka also demanded he pay $17,000 to a company owned by Mr Setka’s then girlfriend, Helen Bouzas, as a “show of good faith” so that the company would win work at Melbourne’s major power station demolition site.

In his statement, Mr Setka rejected Mr Zaf’s allegations.

“According to the media, Andrew Zaf made his allegations to the Victorian government’s Construction Code Compliance Unit (CCCU) in December 2012,” he said.

“I have never been approached by the CCCU or any other authority in relation to those allegations.”

The ABC program says a 2006 file by building industry investigators passed onto Victoria Police says Melbourne identity Mick Gatto was paid $350,000 to keep the old Melbourne power station site trouble-free.

A separate police intelligence file recorded that Ms Bouzas was in 2005 briefly appointed director of a waste disposal business part-owned by underworld identity Mat Tomas, an associate of Mick Gatto and an old friend of Mr Setka. Also in the business was Queensland Hells Angels boss Erol Gildea. Ms Bouzas told 7.30 that the business never got off the ground.

Fairfax Media and 7.30 claimed they’d also discovered that Mr Setka became a partner in a $2.4 million property development in inner-city Seddon in 2008 with a union mate called Frank Prevolsek, and that the work was done by employees of construction companies that rely on the CFMEU’s good will. It was alleged that by 2009 Mr Setka’s name was removed from the development’s paperwork and replaced with the name of a company directed by Mr Setka’s son.

Corruption claims have fuelled a political row on whether a public inquiry is needed to root out workplace corruption.

Political debate

Earlier claims had generated intense political debate, with Prime Minister Tony Abbott pledging to defeat corruption by restoring the Australian Building and Construction Commission and by holding a judicial inquiry.

“Once you’ve got a strong cop on the beat, the whole culture of an industry improves,” he told reporters in Canberra.

His call to restore the ABCC was supported by New South Wales Premier Barry O’Farrell who called on Labor and the Greens to support the necessary legislation.

The former Labor government dumped the ABCC in favour of a Fair Work inspectorate and together with the Australian Greens is blocking legislation for its re-establishment.

A spokesman for Labor leader Bill Shorten said police should be allowed to investigate and accused the Prime Minister and Employment Minister Eric Abetz of playing politics.

Earlier allegations

In allegations documented in the media earlier in the week, a former construction union official claimed he received death threats after trying to stop his union dealing with a Sydney crime boss.

Brian Fitzpatrick, a former industrial officer with the Construction, Forestry, Mining and Energy Union in NSW, also alleged he had been offered $300,000 to leave the union quietly.

It was also revealed this week that a lucrative contract at Sydney’s Barangaroo South project was granted to a labour hire company run by George Alex, who has known links to criminal and bikie gangs.

It’s alleged the contract was granted after intervention by corrupt Construction, Forestry, Mining and Energy Union (CFMEU) officials.

The CFMEU’s NSW construction division secretary, Brian Parker, insists the union’s legal department called the police as soon as Mr Fitzpatrick had alerted them to the threats.

But the former official did not pursue the matter with police.

A broad-ranging inquiry?

The latest claims have generated debate on whether an inquiry could go beyond the construction industry and look at the union movement more broadly, something which cabinet minister Christopher Pyne appeared to favour saying union corruption needed “close attention”.

“If there is a royal commission it will need to be a comprehensive one that deals with alleged corruption and malpractice in the union movement,” he said.