A paedophile priest told a bishop children "enjoyed" sexual activity and asked the Catholic Church for a $25,000 loan at the same time he was being blackmailed by one of his victims, according to documents tendered in evidence to a royal commission.
John Joseph Farrell, who was jailed in May after pleading guilty over a string of sexual offences against youngsters, "never expressed any regret for his actions" according to former Parramatta Bishop Kevin Manning.
A 2005 letter from Bishop Manning, tendered to the Royal Commission into Institutional Responses to Child Sexual Abuse, recounts a meeting with Farrell in which he confronted the priest about "widespread sexual activity with children".
"When confronted with facts (Farrell) said: 'I don't know what you are on about, these kids came looking for it, they enjoyed it'," Bishop Manning wrote.
Farrell was laicised from the priesthood in 2005 after being stood down in 1992 following a series of child sex abuse allegations against him, the commission heard.
According to documents tendered in evidence, church officials discussed continuing to pay Farrell until 1993.
Farrell wrote to the Armidale Diocese in 1998 asking for a $25,000 loan as he had not been funded by the church for five years, according to a letter tendered to the commission.
Separate documents tendered to the inquiry show Farrell was being blackmailed by one of his victims in early 1998.
The documents were released as part of a public hearing into how the Catholic Church responded to allegations against Farrell, which first surfaced in 1984.
Farrell's 2005 application for dispensation from the priesthood, tendered in evidence, contains claims of drunkenness and "wild sexual activity" at St Patrick's College in Manly when he was studying to become a priest in the late 1970s.
Farrell, 63, was sentenced to a minimum jail term of 18 years in May after being convicted of 62 offences involving 12 children in Moree, Armidale and Tamworth between 1979 and 1988.
The hearing before Justice Peter McClellan continues.