The board of an Aboriginal land council entered into an improper arrangement that personally benefitted a former CEO by hundreds of thousands of dollars, a public inquiry in Sydney has heard.

The case at the New South Wales Independent Commission Against Corruption focused on an employment agreement between the board of the Gandangara council and CEO Mark Johnson's company Waawidji, between 2010 and March 2014.

Under the Land Rights Act a CEO is not allowed to receive a benefit from the council, but it is alleged Mr Johnson was able to do so under the terms of his employment contracts with the board.

It is alleged that between June 2010 and June 2014 the council paid Waawidji $229,256.20 to which it was not entitled and that Mr Johnson knew that was the case.

The inquiry will investigate who on the board voted in favour of the arrangements he benefitted from while allowing him to continue as CEO.

Mr Johnson, who was CEO from 2007 to 2014, is also accused of other improper conduct as a public official, including authorising payments to three other land councils partly for the benefit of his company.

The inquiry has heard Mr Johnson also authorised the transfer of $4,970,000 in unsecured loans to the Gandangara Future Fund Limited between March 2011 and April 2013.

The funds comprised some of the proceeds from the sale of a 39-lot residential subdivision at Barden Ridge that was undertaken by the land council and known as the Gandangara Estate Stage Two.

The inquiry heard the funds transfer was against legal advice, a compliance order and the interests of the council - as well as being in breach of the Land Rights Act.

The Gandangara land council covers an area west of Sutherland Shire through Liverpool and Fairfield.