The electoral commission is withholding $4.4 million in public funding from the NSW Liberal Party until it reveals who made $693,000 worth of donations that came via the FEF and helped bankroll its successful 2011 campaign. The commission concluded the FEF was used to "channel and disguise" prohibited donations. Cabinet Secretary Arthur Sinodinos has said the Liberals are philosophically committed to performance pay for public servants Credit:Alex Ellinghausen While Senator Sinodinos maintains he has done nothing wrong, Labor is calling for him to stand aside. In the July 2010 emails, chief fund-raiser Paul Nicolaou tells party figures Michael Yabsley, Brian Loughnane, Simon McInnes and Mark Neeham – as well as Sinodinos, then honorary treasurer and finance director – that Meriton Apartments developer Harry Triguboff had donated $50,000 into the FEF. In the emails, first made public as part of the ICAC hearings, Mr Nicolaou said 50 per cent would go to the "national federal campaign" and 50 per cent to the "NSW federal campaign".

Mr Yabsley responded: "That's great news in relation to Harry. We will show this as a confirmed pledge for $25k." The men also discuss $250,000 in donations from Brickworks' Lindsay Partridge – $100,000 for the federal division and $50,000 each for NSW, Queensland and WA for "their respective federal campaigns". While it is illegal for NSW political parties to take property developer donations for state campaigns the rules for federal campaigns are not so strict. Property developer money can be used by the NSW branch for federal campaigns. Senator Sinodinos has hit back at suggestions he knew the FEF was being used to disguise any payments in NSW. In a letter sent to the electoral commission on Friday, Senator Sinodinos' lawyers said any such conclusion was "manifestly wrong". They have called on the commission to retract all references to him from its publications and publish a correction.

"People within the Liberal Party, including Senator Sinodinos but by no means limited to him, went to great lengths to ensure that the NSW Division understood and complied with the law," the letter said. In a follow-up statement on Saturday, Senator Sinodinos slammed the commission for the "loose language" that had created "erroneous impressions" about his involvement with the FEF. "I have never been accused of corruption," he said. "I deny any wrongdoing or illegality." He goes on to say he will not be responding to the publication of "unsubstantiated rumours, gossip or scuttlebutt". However, he declined to comment about the emails revealed by the ICAC.

Labor frontbencher Jason Clare said Senator Sinodinos was hanging by a thread. "If these people were illegally donating to the Liberal Party when Arthur Sinodinos was in charge of the money then his position really becomes untenable. Malcolm Turnbull has had to sack three ministers already, now I think he is going to have to sack his right-hand man as well," he said. Senator Sinodinos, a former chairman of infrastructure company Australian Water Holdings, was called as a witness during the ICAC's inquiry into the company in 2014. He is not expected to face corruption findings but may face critical comments about his time as non-executive chairman of the company.﻿