On Mr Napoli's second day in the witness box, he could be heard telling his family in a covert recording, that he was owed favours by principals, and he expected them to lie to investigators to provide a cover for false payments made to his son.

"I'm just asking people to pay back now what I've f****** done for them. Part of the reason I'm in this s*** is helping all these f****** people. F****** helped everyone," he said.

Mr Napoli also offered praise to former acting secretary of the department Jeff Rosewarne and sacked department official John Allman, saying he believed the education system had benefited from their "good qualities".

Challenging Mr Napoli's point, Counsel Assisting Ian Hill, QC asked: "so you're saying that's an exemplar of a good group of managers?"

"Sir, they had bad qualities, including myself ... but they had extraordinarily good qualities and public education is the better for it ... on their good qualities," Mr Napoli replied.

Mr Napoli 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.

On Wednesday, Mr Napoli denied there was a culture of nepotism and favouritism in the department, or that there were excessive perks for principals involved in the alleged ring.

He admitted he approved a travel grant for former Essendon North Primary school principal Michael Giulieri, who signed off on invoices for the department. He also admitted he gave an unsolicited $10,000 to Mr Giulieri, but denied this was a bid to have the principal "in his pocket".

He also denied that overseas trips taken by suspended Chandler Park Primary School principal Peter Paul and his business manager Mary Hannett were kickbacks. Mr Paul authorised $30,000 worth of wine purchases,  the Independent Broad-based Anti-corruption Commission previously heard.

Mr Napoli admitted he wrote false invoices from his home, making up the cost of the work and the tax number, which he would instruct companies owned by his relatives to send to schools for payment.

He admitted it was "likely" that he took the lion's share of public money paid through the invoices.

It was also revealed that half of the department's executives had "their own banker schools", and that Mr Napoli was one of the managers opposing a department report's recommendation to abolish banker schools in 2010.

"Management didn't accept that recommendation. Absolutely it didn't, because banker schools continue right to this minute,"​ he said.

Mr Napoli said he believed the department should use his mistakes as "lessons going forward", after telling IBAC on Monday he had views on how the department could improve the banker school system.

Further investigation into the banker school system "has the potential to reveal a lot more information", he said. 

Mr Napoli admitted his behaviour was corrupt: "I go to bed at night and wake up with it in the morning".

The hearing continues.