The closure of WA's controversial potato regulator was plagued by the "serious misconduct" of senior bureaucrats who "abused their power", according to the WA corruption watchdog, with the former head of the agency accused of conspiring to misuse public funds for his own benefit.

Key points: The CEO of the potato regulator, Peter Evans, was given a $400,000 redundancy

The CEO of the potato regulator, Peter Evans, was given a $400,000 redundancy He was then kept on in the role and paid a further $95,000 for consultancy work

He was then kept on in the role and paid a further $95,000 for consultancy work CCC Commissioner John McKechnie said this amounted to a "serious" abuse of power

A scathing report by the Corruption and Crime Commission (CCC) tabled to WA Parliament made serious allegations of misconduct against former Potato Marketing Corporation (PMC) chief executive Peter Evans and another government staffer, relating in part to the agency's closure and legal action against prominent WA potato grower Tony Galati, the owner of the Spud Shed chain of food markets.

The report also accused former Department of Primary Industries and Regional Development (DPIRD) senior staffer Felicity Heffernan of "falsifying records and deceit", resulting in "significant unauthorised expenditure of public funds in defiance of Cabinet decisions".

Redundancy process abused: CCC

The CCC claimed Ms Heffernan concocted a "sham arrangement" to circumvent a State Government hiring freeze and assisted Mr Evans to draw down funds set aside for the PMC's closure for his own benefit — a claim which she has strongly denied.

"Between them, Ms Heffernan and Mr Evans brought about a situation where Mr Evans was, in effect, paid a full redundancy, then immediately hired as a consultant," the CCC report stated.

The CCC said prosecution of Ms Heffernan should be considered, while Regional Development Minister Alannah MacTiernan said she was seeking advice on recovering public funds.

Mr Evans received a $400,000 redundancy, a decision the CCC labelled as "questionable", before signing a "purported engagement letter" while still in the role committing the state to pay him a further $95,040 in public funds for consultancy work relating to the Government's legal action against Mr Galati.

Mr Evans was paid to consult on a legal action against Spud Shed owner Tony Galati. ( ABC News: Robert Koenig-Luck )

The Government had previously rejected a request for $450,000 to deal with the litigation against Mr Galati over breaches of potato growing quotas.

"The engagement letter falsely left the impression that [legal firm] Kott Gunning was involved in the engagement of Mr Evans when it had no idea," the report stated.

"The extent of work actually performed by Mr Evans … remains unclear."

Ms Heffernan "intentionally misled auditors and Mr Evans enabled her to do so" in an effort to justify payments to him, the CCC found.

She also circumvented a hiring freeze to rehire a DPIRD employee, including by directing that worker to backdate an engagement letter to facilitate payments in excess of $100,000.

CCC's findings 'manifestly inaccurate': Heffernan

In a statement, Ms Heffernan said she would complain to the parliamentary inspector about the CCC's "manifestly inaccurate" findings against her.

"Any suggestion, deliberate or accidental, that I had anything to do with Mr Evans's redundancy is absurd, and the CCC has evidence that confirms it is absurd," she said.

Ms Heffernan also said many senior bureaucrats and politicians knew about the approach the PMC board intended to take, but none took any real steps to stop it paying Mr Evans the separation payments it had resolved to pay.

"It's unclear why the CCC failed to mention that a much wider group of people knew about the proposed termination agreements and failed to act on it," she said.

Ms Heffernan said she provided the corruption watchdog with the relevant documents showing how the events unfolded.

Conduct was 'extremely serious'

The CCC also stated in its report that Ms Heffernan had resigned during an investigation into her conduct "without consequence".

CCC commissioner John McKechnie said it was a "real issue" that people could resign from unresolved investigations, then apply for employment elsewhere within the public sector without there being knowledge of the previous proceedings.

CCC Commissioner John McKechnie said Ms Heffernan seriously abused her power. ( ABC News: Andrew O'Connor )

"It is an issue we have asked the Public Sector Commission to give consideration to," Mr McKechnie said.

Mr McKechnie described Ms Heffernan's conduct as "extremely serious".

"She was a senior public officer and she seriously abused that power," he said.

Ms MacTiernan said she first became aware of suspicious circumstances in 2017.

"The conduct outlined in this report is completely unacceptable," she said.

"We are seeking the State Solicitor's Office's advice on the next steps in potential prosecutions and in recovering public funds.