Counsel assisting the Royal Commission into trade unions, Jeremy Stoljar, in an outline of submissions, has called for seven present and past employees of the HSU Number 1. branch in Victoria to be considered for prosecution by the Commonwealth Office of Prosecutions.

Among them is branch secretary Diana Asmar who, said Mr Stoljar, made false and misleading statements in applications for right of entry permits to the Fair Work Commission. The maximum penalty for making false statements is 12 months' jail.

Ms Asmar, a Shorten loyalist, has been HSU secretary since 2012.  While the HSU is no longer affiliated to the Labor Party it has long been fought over by the party's right wing sub-factions. It was previously controlled by forces aligned with Labor frontbencher David Feeney✓ and his long time political soul mate, Kathy Jackson✓.

Ms Asmar on Tuesday attacked Mr Stoljar's recommendations saying they were "entirely" sourced from her internal union opponents and "legally inconsistent".

"With his report, Mr Stoljar has exposed the trade union royal commission for what it is, a $55 million political witch hunt at taxpayers expense," she said. "The report is riddled with inconsistencies and clear biases that ignore facts. Law enforcement agencies will take all of five minutes to realise this."

The royal commission has devoted extensive time to the No. 1 branch and claims that Ms Asmar had told HSU staff that the branch's general manager, Kimberley Kitching, would complete right of entry tests for them. Successful completion of the tests give union staff the legal right to enter workplaces. 

A number of former HSU employees told the commission that Ms Kitching had completed tests for other union officials and Mr Stoljar recommended Ms Kitching, a Shorten factional lieutenant, should be prosecuted for "aiding and abetting" the alleged offences.

Mr Stoljar said charges should be considered against Ms Asmar, David Eden, Darryn Rowe, Lee Atkinson, Sasha Trajcevski-Uzunov and Nick Katsis (a former Darebin councillor), under two sections of the commonwealth criminal code, around making false and misleading statements.

Ms Asmar attacked a decision not to also make recommendations against former HSU employee Peggy Lee - who implicated Ms Asmar and Ms Kitching in the alleged scam. Ms Lee admitted having done right of entry tests for other staff.

Mr Stoljar had recommended Ms Jackson be considered for criminal charges for her role in procuring – and then spending – a $250,000  settlement from cancer hospital Peter MacCallum in 2003 when she ran the HSU's No.3 branch. But other allegations against her were put on hold by Mr Stoljar as he said a civil case against Ms Jackson was already under way.

As The Age reported on Tuesday Mr Stoljar singled out another Shorten ally, Victorian MP and former AWU Cesar Melhem, claiming he had breached the Fair Work Act, and misled the commission, over his handling of the controversial AWU-linked slush fund, Industry 2020.

Parties can respond to Mr Stoljar's submissions and royal commissioner Dyson Heydon will deliver an interim report next month.