The New South Wales premier, Barry O’Farrell, has denied receiving a 1959 bottle of Penfolds Grange wine valued at $3,000 from the former chief executive of Australian Water Holdings, Nick Di Girolamo.

Di Girolamo gave evidence to the Independent Commission Against Corruption (Icac) earlier on Tuesday that he made the gift to O’Farrell “to congratulate him at finally getting into office after 16 long winters in opposition”.

It came while Di Girolamo was conducting a fierce lobbying campaign for his company, Australian Water Holdings, to be granted a lucrative public-private partnership (PPP) to deliver water infrastructure to north-west Sydney.

Icac is investigating AWH and its efforts to secure the deal, which, the inquiry has heard, would have made millions of dollars for people linked to the company, such as the family of former Labor powerbroker Eddie Obeid and Liberal senator Arthur Sinodinos.

O’Farrell’s testimony on Tuesday focused largely on the gift, described by counsel assisting the commission, Geoffrey Watson, SC, as the “Don Bradman” of wines.

Evidence was presented that the bottle of wine had been purchased from Vintage Cellars on 20 April and delivered to the AWH offices in Bella Vista, before being delivered on an unspecified date to an address in Roseville.

“Is Roseville where you live?” Watson asked the premier.

“It was where I lived at the time,” he replied.

O’Farrell told the commission that he was no “wine connoisseur” but that he was certain he would have remembered receiving the bottle. “Having checked this with my wife … we are both certain that it was not received,” he said.

A invoice from the courier company which delivered the wine was entered into AWH’s system on 22 April 2011, but O’Farrell said he had left for a holiday to the Gold Coast with his family on 21 April.

He repeated: "If [the wine] had been received I don't believe I would have forgotten it."

The highest drama of the day followed when Watson presented O’Farrell with a record of a 28-second call made by O’Farrell to Di Girolamo’s phone at 9:30pm on 20 April, tallying with evidence Di Girolamo had given earlier in that day that O’Farrell had called to thank the businessman for the gift and sent a card.

The NSW premier said: “I don’t know about this phone call, but what I do know is if I’d received a bottle of 1959 Penfold Grange I’d have known about it.”

O’Farrell said he first met Di Girolamo in 2007 after becoming state Liberal leader and maintained “once a month” contact with the prominent Liberal party fundraiser in the lead-up to the 2011 election.

He was called to the commission following evidence last week by Greg Pearce, a former finance minister in his government, that the premier had held a “cosy” meeting with Di Girolamo to discuss the PPP deal with Australian Water. Pearce said he felt like “a schoolboy being called in to explain to the headmaster why he hadn't done his homework” when he walked into the meeting on 27 May 2011.

On Tuesday, the commission was presented with notes taken by Di Girolamo of a phone call between him and O’Farrell two days before the meeting, in which he noted that he had told the NSW premier that he was “getting mixed feedback from Pearce’s office”.

But O’Farrell rejected suggestions the phone call had led to the meeting with Di Girolamo and Pearce, saying the meeting had been pre-planned, gone for just 15 minutes and dealt with “a big matter for Sydney and NSW … the issue of land release”.

“It was an issue we were committed to dealing with in a transparent fashion,” O’Farrell said.

“But how does a fellow like this, Mr Di Girolamo, get access to the premier?” Watson asked.

O’Farrell said that before the controversy around AWH surfaced, Di Girolamo was considered “an upright member of the business community”.

“We judge people as we found them at the time and not with the benefit of hindsight,” he said.

O’Farrell said that had he known about expenses that AWH was allegedly charging to Sydney Water, “I’m certain I would have taken a different view.”

The inquiry has heard that AWH billed Sydney Water for a corporate box at Sydney’s ANZ stadium, the inflated salaries of the company’s staff and a number of political donations.

The commission was presented with evidence of several meetings and fundraising dinners attended by both O’Farrell and Di Girolamo, who Watson said was engaged in a “relentless” campaign to get the Liberal leader’s support for a PPP involving AWH, both when he was in opposition and after he came to power in March 2011.

O’Farrell said he dealt with Di Girolamo’s advances “appropriately” and left a decision on the PPP deal to the board of Sydney Water, which was firmly against granting AWH a contract.

At one such fundraising event Di Girolamo noted that O’Farrell had described AWH as “one of our success stories”, recollections which the NSW premier described as painting “a rosy picture from the AWH point of view”.

He said discussions with Di Girolamo at these meetings “inevitably centred around claims around his company’s view of the future, Sydney Water’s view of the future and concerns about it slowing progress in the north-west corridor”.

O’Farrell said he rejected the idea that Di Girolamo had effectively used political donations to buy a letter of support for AWH’s water infrastructure deal, issued by O’Farrell while he was in opposition.

“What drives me mad is the perception. I do not and will not make decisions based on perception of donations being made, and that’s one of the reasons why I was a strong advocate of restricting donations to individuals,” he said.

He defended his chief of staff at the time, Peter McConnell, who in emails with Di Girolamo and Sinodinos, while the NSW Liberals were in opposition, appeared to be providing advice on how AWH should frame its PPP deal to secure the opposition leader’s support.

McConnell was doing “what I would expect an opposition leader’s chief of staff to do”, O’Farrell said.

The inquiry is expected to conclude on Wednesday.