A powerful so-called "purple circle" of corrupt detectives existed in WA's police force at the time of the murder of brothel madam Shirley Finn, an inquest into her death has heard.

Former detective Robin Thoy told the hearing the "heavies" of the group were from the "consorting, vice and break-in" squads, and its leader was vice squad chief Bernie Johnson.

The inquest has heard Mr Johnson was the second detective to arrive at the crime scene near Royal Perth Golf Club, where Ms Finn was found shot four times in the head at the wheel of her car.

Her death in June 1975 came two days before a tax hearing at which she was threatening to expose illicit dealings by politicians, businessmen and police.

Mr Thoy was a junior detective at the time and described the purple circle as "pretty powerful people" who "could do whatever they wanted."

He testified he was once invited to join the circle, but had refused to do what was asked of him by Mr Johnson.

"What he wanted me to do was give evidence in his case," Mr Thoy said.

"I didn't have a clue … I said I wouldn't do it and I knew my career in the CIB was not going to be very good, if at all.

"You didn't say no to Bernie Johnson. He was a very powerful figure. Once you say that, you don't go anywhere."

'It was straight out extortion'

Giving evidence via video link from Tasmania, Mr Thoy also said he was aware police received payments from prostitutes.

"It was just straight out extortion … the girls paid for protection. Bernie was the leader," he said.

When questioned about the veracity of his claims, Mr Thoy replied: "I was in the CIB for 19 years. I watched, I saw if they did well or not.

"I'm not making it up — I was there."

Another former detective, Laurie Tyler, told the inquest he had heard of "the purple circle" and when he first started, it was suggested to him that he should be associating with certain officers if he "wanted a long career".

However, he said they never approached him and he did not know how it operated.

Abe Saffron 'with police at pub'

Mr Tyler also testified he saw senior detectives, including Mr Johnson, at the Raffles Hotel in the company of its owner, underworld figure Abe Saffron.

Sydney underworld figure Abe Saffron was with police at the Raffles, the inquest has heard. ( ABC TV )

He said police officer and now convicted killer Roger Rogerson was also present, but at that time he had not been exposed as corrupt and was considered to be a "highly decorated detective."

He had not found it surprising to see police with Saffron, because "that was their job, to associate with criminals. As a junior detective, I didn't ask questions."

Another witness, Kevin Parker, 75, denied telling police in 1975 that underworld figure Arthur "Neddy" Smith was likely responsible for murdering Ms Finn.

In testimony dotted with expletives, Mr Parker described as "shit" evidence from former police officer James Boland that he had said Smith "would have" been the one who killed Ms Finn.

In August, Mr Boland told the inquest Mr Parker had told him Smith had flown to Perth on the night of the murder and arranged to meet Ms Finn, whom she "fancied".

Mr Boland said Mr Parker had offered to provide the information in return for the downgrading of charges against a friend.

Giving evidence from Melbourne via a phone link, Mr Parker laughed when the counsel assisting the coroner, Toby Bishop, put it to him that he had told Mr Boland Neddy Smith was responsible for Ms Finn's murder.

"Are you for real? Come on, fair dinkum. What is this shit mate? Jesus f***ing Christ," Mr Parker said.

Mr Parker testified he did not believe he would have tried to do "a deal" with Mr Boland to try to help his friend, saying "that's trying to bribe someone. I know I'm a bit of a dope but I don't think so."

He also angrily rejected suggestions from David Leigh, counsel for the police commissioner, that he was "choosing not to recall" what he said in 1975, to assist or protect Mr Smith.

"Why would I want to protect someone's who's dead? I don't know where you're coming from. The answer is no, I don't recall."

Smith is not dead — he is currently serving life jail sentences in Sydney for the murder of two men, one in 1983 and the other in 1987.

The inquest continues.