Sinodinos' wife Elizabeth. Credit:neoskosmos.com The first alarm bell should have rung as soon as he arrived in late 2008. On AWH's payroll was Eddie Obeid jnr, the son of the controversial NSW Labor powerbroker Eddie Obeid. Sinodinos claims that he was unaware that during his time at AWH the Obeids acquired a 30 per cent stake, using $3million from another corrupt deal. Documents tendered to ICAC suggest Eddie jnr had more skin in the game than a mere employee might. For example, when Sinodinos walked down to the Four Seasons Hotel in July 2011, to meet former Labor general secretary Karl Bitar, following in his wake was young Eddie, who no doubt used his father's connections to set up the meeting. Eddie jnr also introduced a potential investor, lawyer John McGuigan, to Sinodinos and others at AWH. McGuigan, who was found to be corrupt at a previous ICAC inquiry into the Obeids' $30 million coal deal, was to invest profits from the sale of his coal company Cascade Coal to buy into AWH. That did not eventuate.

Senior public servants also say they warned Sinodinos about AWH. The commission heard this week compelling evidence that he was alerted to the shenanigans at AWH in May 2010, by one of the unfortunate investors in the company. Rod De Aboitiz's baby-face belies his financial experience. The former chief financial officer at investment bank Rothschild Australia had been persuaded to invest $1 million in AWH by his school friends Eddie Obeid jnr and Nick Di Girolamo on the guarantee the company was about to enter a public-private partnership with Sydney Water. The deal would make the company worth up to $200 million. Although the school motto of St Patrick's College at Strathfield is ''Let Your Light Shine'', when De Aboitiz asked for financial records his former classmates kept him in the dark. When he finally succeeded, De Aboitiz was horrified. AWH had 10 employees, four directors, five lobbyists and only one contract. The wages bill for this corporate minnow was $4 million and despite the millions he and other school mates had put into the company, it was on the verge of collapse. De Aboitiz warned Sinodinos that AWH's expenses were astronomical. What were these mysterious payments that were going to the Liberal Party, he asked. De Aboitiz also alerted Sinodinos to strange payments going to ''a company called Eightbyfive''. It transpired this was a slush fund linked to former state Liberal minister Chris Hartcher, which will be the subject of the next ICAC inquiry, where Sinodinos will also feature. His reputation as a fiscal mastermind and astute manager has been unravelling daily.

De Aboitiz told Sinodinos AWH was in severe financial distress, adding, ''Arthur, you know that solvency is a big issue for a director.'' Sinodinos assured De Aboitiz that ''the board was on top of it''. Asked if he was comforted by that assurance, De Aboitiz told the hearing that because it was Arthur Sinodinos, ''Of course I was comforted.'' But De Aboitiz didn't know the half of it. AWH, while providing water and sewerage infrastructure for Sydney's expanding north-western suburbs, was fraudulently billing the state-owned Sydney Water for expenses including $800 on chauffeur-driven limos that took Di Girolamo to the races and Eddie jnr to the then Acer Arena. Even more astounding was the $75,000 in donations to the Liberal Party. As NSW Liberal treasurer at the time, Sinodinos was effectively the recipient and as an AWH director he was also the donor - but still he maintains he did not know that AWH was giving $75,000 to the Liberals. Sinodinos stood to make $20 million if the NSW government agreed to give AWH the Sydney Water PPP. With his rolled-gold political contacts, Sinodinos was signed on to open the necessary doors. And open them he did. There were meetings with Premier Barry O'Farrell and a raft of relevant Liberal ministers. On Wednesday night this week, about six hours after Sinodinos stepped down from the Abbott ministry, the former assistant treasurer received rapturous applause when he strode into the Commonwealth Club in Yarralumla with his wife Elizabeth.

Joining in the applause were 60 other party faithfuls who had forked out for the $250-a-head dinner ''in honour of Senator The Hon. Arthur Sinodinos AO, the Assistant Treasurer''. Having endured the worst day of his political life, Sinodinos was now among friends, including wealthy property developers and Greek businessmen. Sinodinos, the son of Greek migrants and well-connected to the Greek Orthodox Church, is admired by his federal colleagues for his ability to schmooze business and multicultural groups. ''Nobody wanted to mention the elephant in the room,'' a guest said, referring to Sinodinos' shocking week. As recently as Tuesday afternoon Sinodinos had told his confidants he was going to hang on. Later that evening senior press gallery journalists heard he was wavering. Several Coalition MPs said they knew the ''decision'' had been made for their colleague when they saw the front page of The Australian on Wednesday morning. The newspaper's political editor had called for Sinodinos to step aside immediately to limit the political damage to the Abbott government. ''When you've got the Oz going that hard … well you're f---ed,'' a source said.

At 11.18am on Wednesday Sinodinos walked into the Prime Minister's office and told Abbott he would step aside during the ICAC hearings. Just before 2pm Sinodinos announced his decision to the Senate. Abbott and those close to him knew the government could not continue to withstand these damaging headlines as they had done recently with the conflict of interest scandal surrounding Assistant Health Minister Fiona Nash. It was political death to be merely mentioned in the same sentence as the notoriously corrupt Eddie Obeid. ''How could he stand up and talk about cutting red tape and financial reforms when everyone wants to know about the Obeids?'' a Liberal MP said. Sinodinos, as assistant treasurer, had been leading the government's plans for a series of controversial financial reforms ahead of its first budget, including rolling back consumer protections for clients of financial planners introduced by the previous Labor government. Given the Coalition has attacked Labor so viciously for the corruption of Obeid and his NSW Labor ''mates'', the media was not about to forgive even a whiff of shady dealings from the other side.

At the fund-raising event that evening, Sinodinos spoke briefly to his friend, the former ACT Liberal senator Gary Humphries. ''I gave him a few words of comfort and he expressed some confidence that he was going to get through this,'' Mr Humphries said. Sinodinos was also comforted by former ACT Liberal senator Margaret Reid who said his wife Elizabeth would be feeling his pain. Ms Reid said: ''We'll know you'll stand by your man, Elizabeth, and that's what we're trying to do,'' another dinner guest recalled. Back at Parliament House, Sinodinos' colleagues have been trying to make sense of how their friend and valued adviser had become the first ministerial casualty of the Abbott government. The Prime Minister has said repeatedly that he expects Sinodinos to rejoin the ministry as soon as he completes the ICAC hearings. Privately, others are not so sure. They wonder how Sinodinos can explain the breathtaking naivety required to be ignorant that the Obeid family owned nearly a third of the company he chaired, or how he can explain an apparent neglect of his director's duties.

Sinodinos is seen as a crucial figure in the Abbott government. Widely considered as among the brightest policy brains on the Coalition frontbench, Sinodinos was the ''central link to the lessons of the Howard government'', one MP said. Not only that, but Sinodinos had a ''pastoral style'' - a warm, consultative manner he developed working for Howard, when the former prime minister often dispatched him to ''soothe and stroke'' vexed backbenchers. But while on talent alone Sinodinos would be one of the pivotal figures in the Abbott cabinet, he had been given the junior portfolio of assistant treasurer. Despite being a junior minister, Sinodinos was among a small number of people with whom the Prime Minister shared his speeches and asked for advice. But Sinodinos still felt ''on the outer'', several colleagues said. ''Was he disappointed he wasn't finance minister? Of course he was,'' a senior colleague said. What nobody in the Coalition will dispute is how great a loss Sinodinos will be for the Abbott government. ''He provides an important link to the centre of the Howard government,'' one Liberal senator said. ''We … want to learn from the successes and the failures. Arthur is the link to what's gone before.'' ''He's a good sobering influence on the party,'' another colleague said. ''He tends to be quite a regular conservative bloke. He doesn't believe the world is flat.''

With Lisa Cox