Senior Victorian Education Department official John Allman has been sacked after he admitted destroying financial documents because he had something to hide from an anti-corruption investigation.

The Independent Broad-based Anti-corruption Commission (IBAC) is holding an inquiry into alleged corruption and misuse of school funding within the state's education department.

Mr Allman, who was until today the department's director for south-east Victoria, told the inquiry he destroyed documents detailing financial transactions with the Silverton Primary School at Noble Park, and disposed of the ripped documents into a bin at a Bunnings store.

Mr Allman said he destroyed the documents after eight IBAC officers visited him with a warrant to search his home.

Earlier Mr Allman had been asked if he had discussed the IBAC investigation with the now-sacked director of school resources, Nino Napoli.

On Monday the hearing was told Mr Napoli allegedly funnelled millions of dollars meant for schools through a web of family-linked businesses.

Counsel assisting IBAC Ian Hill QC asked Mr Allman, "Did you ask Mr Napoli not to make mention of Silverton Primary School?"

Mr Allman replied, "No, I don't have any memory of such a conversation."

The hearing was then played an audio recording of a conversation between Mr Napoli and Mr Allman.

Mr Allman was clearly heard saying, "Mate, nothing's come up at Silverton so don't fucking mention that."

'I went into a panic' after visit from IBAC

Under questioning, Mr Allman admitted Silverton Primary School was his banker school and hundreds of thousands of dollars had been transferred to the primary school for discretionary spending.

The so-called banker schools system has been described as a "slush fund" for the discretionary spending of department executives.

He said he kept documents detailing the transactions with Silverton Primary at his home but he could not find the file.

Mr Hill said "We'd like to look at it Mr Allman, but you can't tell us where it is."

Mr Allman then admitted destroying documents.

"I did throw out a lot of documents after the IBAC visit." Mr Allman replied.

"I thought it was better for me not to have any such documents in my possession.

"I went into somewhat of a panic after eight IBAC officers visited my home. I destroyed the documents.

"I did have something to hide. The banker school arrangement has never been a legitimate practice of the education department, so I did have something to hide."

Principal suspended over wine purchase claims

Yesterday it emerged the former acting secretary of the Victorian Department of Education, Jeff Rosewarne, used funds to purchase two coffee machines, $7,000 worth of Italian wine and pay for an overseas trip with his wife and Mr Napoli.

The hearing was told the wine was paid for by Chandler Park Primary School, and bought from the son of the school's principal, Peter Paul.

The Education Department said it had now suspended Mr Paul following the allegations.

"We are deeply concerned about what we heard at IBAC over the past two days," a department spokesman said.

"Peter Paul has been suspended while the department fully investigates his conduct.

"Once our investigation is complete, we will be in a position to take any action that may be appropriate."

The hearing is expected to last six weeks.