MURRAY Goulburn employed the wife of its managing director and paid her hundreds of thousands of dollars while its dairy farmers struggled.

And these payments, which date back 12 years, have only recently been disclosed.

According to Murray Goulburn's financial report, Michelle O'Rourke - the wife of managing director Stephen O'Rourke - received remuneration of $331,918 in 2009-10 and held 419,679 shares at June 30.

During 2008-09, when Murray Goulburn's average annual farmgate milk price was slashed by 26 per cent from February, she received remuneration of $438,203.

The Weekly Times can also reveal that Mrs O'Rourke:

Was Murray Goulburn's fifth-highest paid employee last financial year.

Had her position approved by the board each year.

Has since had her employment terminated by Murray Goulburn.

The explosive revelation also comes as police this week confirmed they were investigating a separate former Murray Goulburn employee over alleged improper payments relating to supply contracts in the Middle East.

Stunned suppliers said they wanted the co-operative to clarify Mrs O'Rourke's position and payments.

Denison dairy farmer Dale Scott said farmers needed to issue Murray Goulburn with a "please explain".

He said a lot of farmers might be "disgusted" by the payments.

"Especially with how tough it has been over the last 18 months to two years," he said.

Allambee South supplier Irene Walker said Mrs O'Rourke's income in the two disclosed years was what young dairy farming couples would spend their entire working life trying to achieve.

Melbourne Business School professor Paul Kerin said "in principle" there was nothing wrong with a chief executive's partner being employed by a company "provided that the partner is chosen for the role on merit and is not paid above-market rates and that the partner's employment and compensation are disclosed according to related party transaction rules".

But he said non-disclosure of the information would represent a serious failure by any company.

In a letter to suppliers last week, Murray Goulburn chairman Grant Davies threw his support behind Mrs O'Rourke and the board's decision, describing the contributions of the O'Rourkes to Murray Goulburn during the past 12 years as "nothing short of outstanding".

Mr Davies later told The Weekly Times Mrs O'Rourke had her employment terminated following a "wide-ranging review" earlier this year.

"We found other people in the organisation can do the role she was doing," he said.

Mr Davies described Mrs O'Rourke's role as providing "support from home or wherever is needed by Steve".

"I would say it is a bit more than a personal assistant ... (she does) secretarial, export development, liaising with suppliers bit of industry relations work, (she) has a huge role in supporting Steve."

He described Murray Goulburn's failure to disclose the information previously as a "reporting oversight".

The unusual decision to pay a managing director's wife and the co-operative's failure to disclose it has also drawn attention from the corporate world.

Shareholder activist Stephen Mayne said the move to pay Mr O'Rourke's wife was "completely unprecedented".

"The CEO should resign," he said.

An Australian Securities and Investments Commission spokeswoman declined to comment.

Mr O'Rourke said Mr Davies "had asked (him) not to comment on this issue".

Mrs O'Rourke did not respond to The Weekly Times requests for comment.