Pressure is now mounting on Mr Loughnane​ over his alleged role in the Victorian division's appointment of Mr Mantach​ as a campaign worker shortly afterwards. Tony Nutt, the Victorian Liberal Party director in 2008, declined to comment because the matter was the subject of a police investigation. Credit:Jessica Hromas Senior Tasmanian Liberals have confirmed that Mr Mantach​ was "asked to resign by the most senior official at the time". Soon afterwards, however, he was employed as a campaign worker by the Victorian Liberal party, and was later promoted to party director. Liberal Party records show that party money flowed illegally through false invoices to a business called Campaign Mail Logistics, which was set up in 2010 in the name of Mr Mantach's​ wife Jodie. Its registered address is the family's home in Ocean Grove. Mrs Mantach has denied any involvement or knowledge of Mr Mantach's alleged actions.

The embezzlement scandal, now being investigated by Victoria Police, is a major blow to the Coalition's electoral prospects in Victoria. It has left the party riven with internal tensions and struggling to explain how how a man removed from one division of the party for misusing funds could have been re-employed, promoted, and allowed to continuing ripping off the party for four years. Outgoing federal Liberal Party director Brian Loughnane. Credit:Alex Ellinghausen Neither the officials in charge of the Victorian or Tasmanian parties at the time at time would comment on the record. When Mr Mantach​ was employed in Victoria the party's director was veteran Liberal stalwart, Tony Nutt. He has refused to comment on the grounds that the matter was subject to a police investigation. Former Tasmanian Liberal president Dale Archer said "Brian Loughnane was informed by me of the full extent of the circumstances surrounding Mr Mantach's departure."

Liberal sources familiar with the details of Mantach's​ Victorian employment insist that, while they were aware of a minor credit card problem, they did not know of the $47,981.78 in personal spending in Tasmania. Victorian Liberals have sought to blame the Mantach​ scandal on the failure of the Tasmanian Liberals to inform them of the extent of Mantach's credit card problem. Former federal Liberal Party treasurer Phil Higginson called for the party’s accounts across Australia to be forensically audited. One insider senior in the Victorian Liberal party from 2008 noted that Mr Mantach's​ father had been party Tasmanian president, and that the island's small and insular branch appeared to have kept the credit card problem under wraps to protect the family name. Current Tasmanian Liberal president Geoff Page said he could not comment about the circumstances of Mr Mantach's departure in 2008 because he was not involved at the time. He referred Fairfax Media to former president, Dale Archer.

Current Tasmanian Liberal president Geoff Page said he could not comment about the circumstances of Mr Mantach’s departure in 2008. Credit:Launceston Examiner Nor would Mr Archer comment to Fairfax Media, claiming he was no longer authorised to speak on behalf of the Liberal party. However, Mr Archer told News Corp he informed Mr Loughnane of the reasons behind Mr Mantach's departure. "I requested Mr Mantach's resignation, effective immediately, which was received," Mr Archer said to News Corp. "Brian Loughnane was informed by me of the full extent of the circumstances surrounding Mr Mantach's departure. There is a file note that confirms in writing that the federal director was advised of this issue on the 6th of March, 2008."

A senior Tasmanian Liberal insider from 2008 reacted angrily to claims Mantach​ had been protected. "No one in the Tasmanian division knew Mantach​ had been employed in Victoria. And it appears no one from Victoria called to check or ask for references. So who recommended him?" Numerous Tasmanian Liberals have proposed that Mr Mantach​ was employed in Victoria at the behest of federal party director, Brian Loughnane​. However none have provided evidence. But Mr Loughnane​ sought to put the blame back on the Victorian branch. "I had no reason to believe he was a crook. At the time he was appointed to the Victorian Division, that was a matter for them."

On Thursday new Victorian Party president Michael Kroger said he hoped to recover some of the missing funds, which had been spent on investments and "lifestyle". "It should never have happened," he said. "We're not aware that anyone else at head office had any involvement at all." On Thursday Opposition Leader Matthew Guy said Liberals were gutted and furious, calling it a "pretty basic effort of embezzlement". "We want our money back, we want this matter sent to the police and we will be doing everything we can to ensure that justice is done," Mr Guy said. The alleged fraud was detected after concerns were raised about spending during the 2014 state election campaign and the 2013 federal campaign. A subsequent audit by forensic accountants PPB Advisory found at least $1.5 million.

The fraud allegedly included payments to non-existent companies for non-existent services. The Age understands Mr Mantach​ is still a member of the Liberal Party's Victorian division. However, it is believed his membership status will be reviewed by the party's administrative committee pending the outcome of the police investigation. Meanwhile, PPB Advisory will continue its investigation into all of Mr Mantach's​ activities, focusing on his financial dealings with the party.