Hundreds of thousands of dollars in illegal political donations were used to bankroll the Liberal Party's 2011 state election campaign after being funnelled through a slush fund run by former energy minister Chris Hartcher, a corruption inquiry has heard.

The Independent Commission Against Corruption inquiry into fund-raising and influence-peddling in the NSW Liberal Party, codenamed Operation Spicer, opened on Monday with explosive allegations that Mr Hartcher and fellow Central Coast Liberal MPs Chris Spence and Darren Webber corruptly solicited more than $400,000 in campaign donations in return for political favours.

Explosive allegations: Former energy minister Chris Hartcher. Credit:Glenn Hunt

Among the donors were Nathan Tinkler's property development group Buildev, the Obeid-linked company Australian Water Holdings and Gazcorp, the developer behind the controversial Orange Grove shopping centre development in Liverpool.

Mr Hartcher, who quit cabinet last year after the ICAC raided his Central Coast electorate office, allegedly laundered some of the cash through a Central Coast law firm, which was "dragged ... unwittingly into an illicit enterprise".