Victoria’s corruption watchdog is looking into suspicious conduct at a regional Victorian TAFE.

The Independent Broad-based Anti-Corruption Commission (IBAC) has heard the executive manager of the South West Institute of TAFE at Warrnambool, Maurice Molan, was approached by Rebecca Taylor, the owner of training company Taytell with an offer to deliver an engineering course.

The hearing was told the TAFE was at risk of being shut down by the State Government, and so it needed third parties to operate some of its courses.

Ms Taylor collected $1.8 million in state subsidies for the course as well as almost $500,000 from the TAFE.

Counsel assisting Ian Hill QC said none of the power company employees that the course was designed for actually took part in it, despite Ms Taylor – who denies any wrongdoing - billing for over 172,000 student contact hours.

Mr Molan admitted he had signed off on Ms Taylor's contact with the TAFE knowing she lacked any engineering qualifications, but denied later accessing the TAFE's student database to falsely state that Ms Taylor had obtained the necessary qualifications.

“I have no recollection of doing it but I don't deny it was done under my name,” he said.

Mr Molan allegedly gave Ms Taylor passing marks in a Certificate IV in engineering close to the time that she submitted her first invoice for $1.4 million.

Mr Molan said he did nothing to verify that the course was actually being delivered.

“We thought this was a legitimate training exercise,” he said.

The TAFE's chief executive at the time, Peter Heilbuth, admitted he approved Ms Taylor’s contract without knowing anything about her company.

“Maybe in this instance I relied on Mr Molan too much,” he said.

He said that when he asked questions about the first invoice from Ms Taylor, Mr Molan assured him “it was all above board”.

The hearings will continue, and Mr Molan may be recalled to give further evidence.