THE Coalition has accused Julia Gillard of breaking the law by lying to authorities about a union fund she helped establish 20 years ago, while the Prime Minster has dismissed a key witness against her as a self-confessed fraud who uses Asian prostitutes and is regarded as an imbecile.
As the opposition's deputy leader, Julie Bishop, vowed to keep pursuing the prime minister despite having no documentary evidence to back her central claim, Ms Gillard again protested her innocence and warned the Coalition it risked losing voters by focusing on ''filth and smear and sleaze''.
''There's not one person who's able to come forward and clearly say I did something wrong.''
But she did not deny she had written a letter to West Australian corporate authorities in 1992 vouching for the bona fides of the slush fund.
Instead, Ms Gillard told Parliament that the alleged letter had never been produced.
With Parliament to rise for the year on Thursday, the opposition is pursuing Ms Gillard over her actions as a lawyer 20 years ago with Slater & Gordon.
She provided legal advice to her then boyfriend and Australian Workers Union Victorian state secretary, Bruce Wilson, who established a slush fund in 1992 known as the AWU Workplace Reform Association.
The fund, contributed to by construction companies, was supposed to be used for the re-election of AWU officials on a workplace safety platform but instead Mr Wilson siphoned money from it. In one instance, Mr Wilson bought a house in Fitzroy in the name of his sidekick Ralph Blewitt.
Mr Blewitt said last night Ms Gillard may well be innocent of knowing the fund was a rort.
''I don't know if she knew.''
Ms Gillard repeatedly protested that all she did was provide legal advice to Mr Wilson and she had no other knowledge of, or involvement with, the fund, and that she dumped Mr Wilson in 1995 when the fraud emerged.
Ms Bishop has accused the Prime Minister of knowing all along that the fund was a rort and having helped with the deceit.
She alleged Ms Gillard should have satisfied herself that legal requirements were met, which included the union's national executive approving the fund's creation and that it could contain ''AWU'' in its title.
Also, to be incorporated, a fund needed five members whereas this fund had just two - Mr Wilson and Mr Blewitt.
Ms Gillard rejected this, saying ensuring whether these requirements were met was a matter for the union and the incorporating body, the Western Australian Registrar of Incorporated Associations.
She said she assumed the AWU had approved the fund because she was dealing with Mr Wilson and Mr Blewitt who were elected officers of the AWU.
Ms Bishop alleged the WA Commissioner of Corporate Affairs raised concerns and Ms Gillard wrote in 1992 saying the fund ''complied with the requirements of the Act even though she knew it did not''. Ms Bishop was unable to produce the letter.
Ms Gillard was especially scathing of Mr Blewitt, who claims she illegally witnessed him signing over power of attorney regarding the Fitzroy property without him being present.
Ms Gillard denied this. ''It comes down to Mr Blewitt's word against mine.'' She noted Mr Blewitt fled Indonesia to avoid a police interview in relation to land fraud, used Asian prostitutes and ''has published lewd and degrading comments and accompanying photographs of young women on his Facebook page''.
''Mr Blewitt, according to people who know him, has been described as a complete imbecile, an idiot, a stooge, a sexist pig, a liar, and his sister has said he's a crook and rotten to the core.''
Mr Blewitt rejected her attack as a smear. ''What bloke hasn't on holiday or away,'' he said of the use of prostitutes.