The CFMEU's administration on Wednesday alleged the ex-Victorian branch secretary rorted $3.3 million in revenue from merchandise and site vending machines to his own companies.
Setka has been expelled from the CFMEU for a legal maximum of five years, effective immediately.
Union administrator Michael Crosby says Setka was expelled after facing 27 charges under the CFMEU's disciplinary process, alleging he failed in his duty as secretary of the organisation.
"John Setka held a position of responsibility but abused that privilege to take millions of dollars from the members of the CFMEU," Crosby said.
"John Setka's conduct is shameful. He has failed in the most basic duties of a union official - to put members' interests above all."
Setka slammed the union's claims as defamatory and questioned why police were not involved if the union believed he had committed fraud.
"There was no criminality, it's absolute bullshit," he told AAP.
"I categorically deny it, it's a pack of lies and I would be in handcuffs if that had actually happened."
Mr Crosby vowed the union would continue to pursue Setka for the allegedly misappropriated funds.
Setka did not respond to the allegations put forward by the CFMEU administration, according to Mr Crosby.
The 62-year-old served as secretary of the CFMEU for more than a decade before stepping down in July 2024 following explosive allegations of criminal conduct.
He has denied all allegations of misconduct.
The CFMEU was plunged into administration by the federal government one month after Setka's resignation following claims of bikie and organised crime figures infiltrating the union.
On Wednesday, former CFMEU organiser Paul Tzimas told a royal commission into alleged corruption that nearly a dozen people with bikie connections were given key roles on major construction projects across Victoria.
The commission was told Mr Tzimas was once given an expensive gold bracelet by underworld figure Mick Gatto, who described the gift as "an olive branch".
This week of hearings is probing the circumstances of a two-day work stoppage on a major level-crossing removal project on Gap Road in Sunbury, northwest of Melbourne, in June 2022.
Work ground to a halt on the project on June 6 of that year after CFMEU delegates occupied the site, issuing dozens of safety notices, blocking machines and refusing to move even when police were called.
Operations only resumed after the union's demands were agreed to during a June 7 meeting, including installing their own union-aligned labour contractors and a health and safety representative, the inquiry was told earlier.
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