New South Wales Upper House MP Marie Ficarra has told the Independent Commission Against Corruption (ICAC) that some of the earlier evidence she gave was "unknowingly wrong".

Ms Ficarra has been accused of soliciting a $5,000 illegal donation from developer Tony Merhi, which was then channelled through alleged slush fund Eightbyfive.

She stood aside from the parliamentary Liberal Party and has been sitting on the crossbench since the allegations against her were aired at the opening of the ICAC inquiry into alleged Liberal slush funds and donation for favours.

On Thursday Ms Ficarra and Mr Merhi gave almost totally conflicting evidence about how he came to make a $5,000 payment to Eightbyfive, leading counsel assisting Geoffrey Watson SC to accuse of her "fibbing" and making up evidence as she went along.

He told the hearing that details Ms Ficarra gave in support of her evidence contradicted what she had said when giving private evidence in July.

Ms Ficarra explained away the changes by saying her memory had been jogged by a diary note about her sick miniature schnauzer.

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On her second day in the witness box, Ms Ficarra conceded that some of her earlier evidence had been incorrect.

"Now I know it to be wrong ... but it was unknowingly wrong," she said.

Mr Watson then suggested that Ms Ficarra's story was not at all truthful and that she knew Eightbyfive was a slush fund.

"You knew that it was a means of collecting money from otherwise prohibited donors," Mr Watson said.

"Absolutely not," Ms Ficarra replied.

"You knew that it was a scam when you did it, didn't you?" he asked.

"Absolutely not," she replied.

"You knew Eightbyfive had emerged from the office of [former energy minister] Chris Hartcher," he said.

"Absolutely not," Ms Ficarra replied.

On Thursday Mr Merhi said Ms Ficarra had recommended Eightbyfive as a lobbying service, and that he had been "set up".

But Ms Ficarra insisted she had simply told Mr Merhi his "community" might like to help out the Young Liberal Flying Squad and put him in touch with Young Liberal vice president Charles Perrottet.

Yesterday the MP also rejected Mr Watson's suggestion that she was trying to drag down the reputation of Mr Perrottet in order to "save her own skin".

Asked how Mr Merhi's money had ended up in the Eightbyfive account, Ms Ficarra said: "Somehow it ended up there, someone was responsible, but it wasn't me".

Also making an appearance at ICAC on Thursday was the former head of Australian Water Holdings (AWH), Nick Di Girolamo.

In the lead up to the 2011 election, AWH made regular payments to Eightbyfive but Mr Di Girolamo denied it received favours in return.

He conceded he had a hand in drafting a press release issued by Mr Hartcher's office about a site AWH had an interest in, but said he could not see anything wrong with doing so.

Mr Di Girolamo, who was also the man who gave a now infamous bottle of Grange Hermitage to former premier Barry O'Farrell, also told ICAC he could not remember if he had organised for Mr Hartcher to ask questions in parliament which would benefit AWH.