No Victorian Labor MPs will be criminally charged despite an integrity investigation unearthing deliberate, extensive and "egregious" misuse of taxpayer resources.
The Independent Broad-based Anti-corruption Commission and Victorian Ombudsman released their joint report into branch stacking allegations within the party on Wednesday.
The watchdogs considered whether the identified misconduct constituted criminal offending that should be referred to the Director of Public Prosecutions and ultimately opted against it.
"Although we consider the conduct to be egregious, the difficulties in proof are such that we cannot recommend prosecution," the report said.
"Rather, it will now be a matter for the Privileges Committees of each house to decide whether the named MPs have wilfully brought discredit upon parliament."
It found branch stacking was not limited to one Victorian Labor faction but evidence of misconduct only concerned the party's moderate faction.
The probe was launched following allegations in a Nine Network investigation that Labor moderate faction powerbroker Adem Somyurek handed over cash and used parliamentary employees to create fake branch members and amass political influence.
The practice, known as branch stacking, is not illegal but against Labor party rules.
Mr Somyurek quit the party in June 2020 before he could be expelled following the reports.
His factional allies Robin Scott and Marlene Kairouz also departed cabinet following the expose. All three MPs have previously denied wrongdoing.
Luke Donnellan became the fourth ministerial casualty in October after then-federal MP Anthony Byrne told the joint inquiry the pair paid for others' Labor memberships.
The report determined Mr Somyurek and Ms Kairouz breached elements of the ministerial and MPs codes of conduct but made no adverse findings against Premier Daniel Andrews and other witnesses.
In all, Mr Somyurek and six other witnesses were questioned in public hearings and another 26 in private, including Mr Andrews.
The premier previously refused to confirm if he was interviewed or comment on the probe until the final report was released.
According to the report, Mr Andrews "agreed that the practice was not limited to one faction and occurred 'across the board'" but he "denied any personal knowledge of or involvement in such practices".
IBAC Commissioner Robert Redlich said he was "not particularly troubled" by being unable to pursue criminal charges against Mr Somyurek and Ms Kairouz.
"Ultimately, one has to formulate a view about whether we think there's a significant chance that prosecution would be successful and, as we've indicated, we've reached the conclusion it would not," he told reporters.
The 233-page report makes 21 recommendations, including legislating a parliamentary ethics committee, tightening the definition of permissible work for electorate officers and banning MPs from employing close family members in their electorate office.
The government banned electorate officers carrying out campaign duties during work hours in 2019 following Labor's "red shirts" scandal but the new rules do not cover factional work outside of elections.
The proposed reforms should be seen as a package and "that one without the other will likely not be effective", Mr Redlich said.
Asked if further inquiries might stem from what was uncovered during the Operation Watts investigation, Ombudsman Deborah Glass said the matter had concluded.
