Disgraced former Education Department senior official Nino Napoli has fallen on his sword at an explosive anti-corruption hearing, admitting he stole thousands of dollars from state schools.

The scope of the alleged corruption was widened, and it was suggested on Tuesday that Mr Napoli misused Education Department funds for almost two decades.

In a highly-anticipated appearance before the Independent Broad Based Anti-Corruption Commission, the alleged architect of a scheme that ripped off schools said he had abused his position of trust.

"What I have done is dreadful," Mr Napoli said.

The hearing was animated at times, with counsel assisting the commission, Ian Hill, QC, staging a mini spelling bee to see if Mr Napoli could spell the word commitment. Mr Napoli failed the test, which Mr Hill suggested meant he had written a fraudulent invoice.

Holiday snaps of Mr Napoli and the department's former acting secretary Jeff Rosewarne lying clothed on a hotel bed together, and grinning outside Buckingham Palace, were shown as evidence.

The photos related to a 2009 taxpayer-funded overseas trip that Mr Napoli went on with Mr Rosewarne and his wife.

Mr Napoli admitted that invoices to schools were inflated to pay for Mr Rosewarne's wife's $9500 travel expenses..

Mr Napoli was sacked by the department in April, and stands accused of running a $2.5 million fraud ring, which funnelled money away from the Education Department between 2007 and 2014. The bulk of the money went to Mr Napoli's relatives.

The former director of school resources also admitted he asked his son Ralph to lie to investigators to get him out of trouble.

Mr Hill  said $120,000 of Education Department funds were paid into Ralph Napoli's bank account for work he never did.

Mr Napoli's other son, Matthew, also got paid for doing nothing.

Mr Napoli said his sons and wife were unaware of the fraudulent payments.

He acknowledged that Education Department funds were funnelled through companies owned by his cousins Carlo and Luigi Squillacioti. He admitted he asked Carlo to set up a company to tender for Education Department work.

"I would've said Carlo there's opportunities here, do you want to tender for it?"

He said his cousins owned three different printing companies – which did not own printers – as "a silly way of disguising my conflict."

One of the companies sent invoices for printing to the department in 1996 and 1997– but Mr Napoli said the work was completed.

Mr Napoli said he discussed conflicts of interest with Mr Rosewarne, who he claimed was aware that department funds were being sent to his cousins' companies.

Mr Napoli was wearing his signature toupee. Last week it was revealed at the hearing that Mr Napoli suggested his cousin Carlo bill state schools thousands of dollars for the expensive hair piece,

Mr Napoli also said he has "views" on how to improve the integrity of the banker school system.

The scheme was used to divert money away from schools and into companies owned by Mr Napoli's relatives.

Mr Napoli said one of the criteria for choosing a banker schools was having a "mateship" with the principal.

"You would certainly not make a banker school with a principal that you had no relationship with. I think all banker schools run in that respect."

The IBAC inquiry has claimed seven scalps including Mr Napoli, former regional director John Allman and a number of principals.

Mr Napoli will return to the witness box on Wednesday.