Israel Folau rejects a $1m peace offering from Rugby Australia

Rugby Australia’s massive offer to Israel Folau ahead of his code of conduct hearing suggests there may be serious concerns about the result in the upper echelons of the game’s governing body.

• ISRAEL FOLAU: Case for and against

• HEARING LATEST: What happened on Day 1

Israel Folau rejected a settlement offer of nearly $1 million to walk away from his contractual fight against Rugby Australia before the start of his landmark code of conduct hearing, which will now stretch into next week.

The Sunday Telegraph can reveal RA made the last-ditch offer to Folau and his legal team earlier this week, hoping to avoid the hearing, which started on Saturday and will continue today, with a decision not expected until midway through next week.

The secret late settlement offer suggests RA may be ­seriously concerned about losing their battle against the Wallabies star, who signed a four-year, $4 million contract extension in February.

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A statement from Rugby Australia advised the hearing was set to stretch into a third day after the panel received further evidence from both Castle and Hore.

“The Code of Conduct hearing for Israel Folau will continue on Tuesday, May 7,” the statement read.

“The panel received oral evidence from NSW Rugby CEO Andrew Hore and further oral evidence from Rugby Australia Chief Executive Raelene Castle today.”

RA announced it would terminate Folau’s contract after he posted homophobic content on social media on April 10, which the 30-year-old is now challenging.

Folau, RA chief executive Raelene Castle and Wallabies coach Michael Cheika all gave verbal evidence at the hearing on Saturday.

No further witnesses are expected to be called today although Folau is required to attend when the panel of John West QC, Kate Eastman SC and John Boultbee reconvenes to hear further argument from both sides.

A decision will follow early in the week.

Israel Folau leaves Rugby Australia’s HQ after a day of hearings. Picture: Matt King/Getty Images

If RA’s case to terminate Folau fails, they’ll be forced to pay out the remainder of his $4 million deal, given they’ve resolved not to pick him for the Waratahs or Wallabies again.

The panel heard about the formal warning given to Folau 12 months ago when he made similar social media comments, and assurances given to Castle and Cheika that he would not post any further material that would bring his employer into disrepute or distract from NSW Waratahs and Wallabies’ Test match campaigns.

However, they also learned that when RA tabled Folau his new deal, he signed. RA then sent him an additional letter to sign with specific social media clauses. Folau returned the letter and told RA he would not sign it. His original contract stood.

Michael Cheika also made an appearance at the Code of Conduct hearing. Pictures: AAP Image/Paul Braven

RA is already facing an $8 million shortfall due to hosting only three home Test matches this year because of the World Cup in Japan.

Having to pay out Folau his full deal would leave the cash-strapped code on the verge of insolvency, with key sponsors also set to pull out regardless of how Folau’s battle transpires.

Israel Folau wants to play for the Wallabies again. Picture: AP Photo/Rick Rycroft

RA is relying on its case that Folau has vilified the gay community for a second time, having already received a formal warning, while his standard contract specifically states: “Treat everyone equally, fairly and with dignity regardless of gender or gender identity, sexual orientation, ethnicity, cultural or religious background, age or disability. Any form of bullying, harassment or discrimination has no place in Rugby”.

Folau’s legal team are arguing he merely quoted Biblical scripture and has not personally targeted anybody with his own words.