The Australian Federal Police has been investigating criminality in the sector, including allegations of corruption, money laundering and other organised crime in Victoria.
A senior federal police officer sent a letter to Melbourne, Sydney and Brisbane building companies that revealed ongoing intimidation was hampering efforts.
The federal agency was told many contacted business owners had been "intimidated into not co-operating with police after receiving threats".Â
"The source of these alleged threats has been made known to the AFP,'' reads the March 13 letter, published by Nine newspapers.
"Information has also been provided to the AFP that confirms companies have made facilitation/extortion payments to organised crime to enable building projects to progress uninterrupted."
Barrister Geoffrey Watson's "Rotting from the Top" report into the Victorian branch of the construction union said fear among witnesses lingered and prevented some from speaking out.
Victorian Premier Jacinta Allan has repeatedly said allegations of construction sector illegality should be referred to police.
She maintained the advice was appropriate despite the letter's claims.
"I was concerned to read those reports," Ms Allan told reporters on Thursday.
Former CFMEU official and bikie Joel Leavitt, one of four men charged over an alleged extortion plot, faced court on Thursday seeking to vary his bail conditions so he could leave the state for work purposes.
The prosecution simultaneously applied to change his bail conditions to prohibit him from associating with Codee Staff, a man police believe has been appointed Melbourne chapter president of the Bandidos.
The variation application was ultimately adjourned after the magistrate raised concerns over the legitimacy of payslips purporting to show Mr Staff was an employee of Leavitt.
The case will return to court on Wednesday.
Co-accused Jared Davis, 42, is expected to make a bail application next week after he was extradited from Tasmania.
Police allege Davis is a patched member of the Bandidos and was involved in the unwarranted demand for $663,000 at a business in Melbourne's west in January.
The Independent Broad-based Anti-corruption Commission can investigate public officials but not third parties such as union officials and bikies under its legislative framework.
Legislation to give Victoria's corruption watchdog "follow the money" or "follow the dollar" powers passed the upper house on Wednesday with support from the coalition, Greens and other crossbenchers.
In the lower house, Labor MPs used their commanding numbers to block the bill from being debated.
In December, a parliamentary committee recommended amending the IBAC Act to give the agency the power to probe public funds spent by private entities.
The state Labor government is required to respond to the report within six months.
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