FEDERAL Assistant Treasurer Arthur Sinodinos’ job is under enormous pressure after ICAC alleged he was offered up to $20 million to use Liberal Party connections to secure a contract with the O’Farrell government.

In an extraordinary opening address to the inquiry into Australian Water Holdings in which corruption is alleged against both Labor and Liberal figures, counsel assisting Geoffrey Watson alleged Mr Sinodinos was paid $200,000 a year plus bonuses by AWH while working only “100 hours a year”.

SINODINOS COULD HAVE MADE $20 MILLION, ICAC HEARS

Mr Watson alleged Mr Sinodinos’s “true role in Australian Water Holdings was to open lines of communication with the Liberal Party” and that he faced a “$10-20 million payday” if his lobbying efforts were successful.

He was the treasurer of the Liberal Party’s state branch at the time and later became its president before being appointed to the senate in 2011.

Mr Sinodinos will be one of the main subjects of the inquiry into an attempt by former AWH chief executive and Liberal donor Nick Di Girolamo to win a private public partnership (PPP) contract with both Labor and Liberal state governments, which would have netted AWH shareholders $100-$200 million.

The allegations before ICAC include:

● THAT the state government-owned Sydney Water unwittingly became a major Liberal Party donor after Mr Di Girolamo siphoned payments intended for water infrastructure to the party;

● THAT former Labor powerbroker Eddie Obeid’s family took a secret 30 per cent stake in AWH and Mr Obeid aggressively argued within the Labor government for a PPP agreement with AWH which stood to net the Obeids $30-60 million; and

● THAT evidence was discovered on Labor powerbroker Joe Tripodi’s laptop that he falsified a Cabinet minute recommending the contract go ahead which the then Infrastructure Minister Tony Kelly presented.

However, then Labor Premier Kristina Keneally knocked the submission back.

Last night, the revelation around the donations forced the Liberal Party to return $75,536 to Sydney Water.

The inquiry also heard that Mr Di Girolamo used Sydney Water funds to pay himself $1.1 million a year and a fellow AWH director $1.6 million a year.

At this time AWH had five directors, including Mr Sinodinos, even though it only had 10 employees, one of whom was Eddie Obeid Jr.

Eventually, a 25-year agreement, far less lucrative than the PPP, was reached between Sydney Water and Australian Water to resolve a long-running dispute about project managing water infrastructure for northwest Sydney.

That contract was negotiated after Premier Barry O’Farrell was lobbied by Mr Di Girolamo, but Mr Watson said yesterday there was “no evidence” of any wrongdoing by the Premier and the contract was “fair”.

Mr Sinodinos was made an AWH board member by Mr Di Girolamo in 2008 when, according to Mr Watson “it was apparent ... that the government would change and the Coalition would take power.”

Mr Sinodinos was given a 5 per cent stake in the business as well as a 2.5 per cent “success clause” if the government approved Australian Water Holdings’ proposal.

“If the PPP (public private partnership proposal) came through, Mr Sinodinos would have enjoyed a $10 or $20 million payday,” Mr Watson said.

“It is quite transparent that Mr Sinodinos’s true role in Australian Water Holdings was to open lines of communication with the Liberal Party.

“There will be evidence that he tried to do so.”

ICAC also heard of false corruption allegations against former Sydney Water boss Kerry Schott after she blocked attempts by Mr Di Girolamo to win the contract.

An anonymous allegation was made to ICAC against Ms Schott shortly after Mr Obeid predicted to former Water Minister Phil Costa that Liberal MP Chris Hartcher would be making a corruption complaint against her, Mr Watson said.

Mr Watson said the anonymous complainant had been located but, tantalisingly, chose to only say the source of the complaint “made its leap across party lines”.

Mr Watson revealed another Liberal figure to feature will be lobbyist Michael Photios, who Mr Di Girolamo is alleged to have offered a success fee of $1 million if he could get his project up, just months before Mr O’Farrell introduced laws banning success fees.

A spokesman for Mr Sinodinos said he “would attend the ICAC as a witness and was looking forward to assisting the inquiry.”

A spokeswoman for Prime Minister Tony Abbott said: “The minister will cooperate fully with the ICAC inquiry. There is nothing further to add.”

The inquiry continues today.

SINODINOS UNLIKELY TO ESCAPE UNSCATHED Comment Andrew Clennell

ARTHUR Sinodinos’s role in the Australian Water affair is set to test the very definition of appropriate official behaviour.

It seems there are clever new ways to derive a financial benefit from a government decision you can potentially influence.

Counsel assisting Geoffrey Watson, SC, used strong language to describe Mr Sinodinos that indicates the federal minister will play a major role in this ­inquiry.

There was potential for a $20 million payday if Mr Sinodinos got the O’Farrell government over the line on a contract for Australian Water which was paying him $200,000 a year for “100 hours work a year”.

As a Liberal Party treasurer and then president, what was Sinodinos doing getting on a donor’s board when there were five board members to 10 employees, a son of Labor powerbroker Eddie Obeid was an employee and there was a contract to be settled with an ­incoming Liberal government?

This could be the first time since ICAC’s inception that a federal minister is caught in the commission’s investigations. Even if no corruption finding is made, the chances of Mr Sinodinos being politically damaged appear much higher after yesterday.

The inquiry also promises to show again that Mr Obeid saw government as a business.

“You need to sack that bitch,” Eddie is alleged to have said to former Labor minister Phil Costa after Sydney Water boss Kerry Schott would not settle the contract with Australian Water boss Nick Di Girolamo. Then he travelled 60km with his son and Mr Di ­Girolamo to Narellan to put his sales pitch to Mr Costa.

One thing that stands out after yesterday is despite all that has been said and written about corrupt politicians in NSW in the past few years, some of the senior public ­servants in the government bureaucracy did their job in protecting the public.

Ms Schott deserves a ­bravery award for the way she pushed back on Mr Di Girolamo and Mr Obeid, against all manner of pressure.

Mr Watson also told of how Mr Di Girolamo spent the more than $1 million a year he was paying himself.

One avenue was to “settle debts between he and John Rippon (a fellow AWH director) including money owed in relation to a racehorse”.

The horse’s name?

“Partners in Crime”.

O’FARRELL CLEARED OVER DI GIROLAMO MEETINGS Andrew Clennell

THERE was “no evidence” to suggest Premier Barry O’Farrell or his former finance minister Greg Pearce were involved in any form of corruption over the awarding of a 25-year contract with Australian Water Holdings, ICAC heard yesterday. Mr O’Farrell; was interviewed by the commission, but counsel assisting ICAC, Geoffrey Watson, said: “We have looked carefully at the activities of Mr O’Farrell and Mr Pearce and we have found no evidence to implicate either in any corruption”.

Mr Watson confirmed several meetings between Mr O’Farrell and the man who is the central ICAC target, former AWH boss Nick Di Girolamo, but said ICAC had found no wrongdoing.

Mr Watson said that from 2010 Mr Di Girolamo had pursued Mr O’Farrell, then the Opposition Leader, “relentlessly” over a potential public private partnership contract. “Mr O’Farrell entertained the idea but made no commitment,” Mr Watson said.

“It is an established fact that despite the political pressure which was brought to bear by Australian Water Holdings, the bureaucrats and the politicians did not give way.”

LIBERAL PARTY PAYS BACK $75,000 IN TAINTED DONATIONS Phil Jacob

THE Liberal Party has repaid $75,636 to Sydney Water after ICAC revealed the state government-owned agency had unknowingly become a major donor through dealings with Australian Water Holdings.

“The return of these tainted ­donations to Sydney Water is the right thing to do,’’ acting state director Simon McInnes said last night.

The move came after counsel assisting Geoffrey Watson said in his ­address before the Independent ­Commission Against Corruption: “It seems that Sydney Water has — unwillingly, unknowingly — been a principal Liberal Party donor.”

“It may seem funny, but it quickly descends into the absurd,” he said.

“Australian Water Holdings were making big donations to the Liberal Party — $20,000 here; $30,000 there. On what I have seen those donations were bundled up into expenses and charged back to Sydney Water.”

The transaction came about through Nick Di Girolamo in his then capacity as chief executive of Australian Water Holdings, ICAC heard.

Mr Di Girolamo had charged Sydney Water for project managing water infrastructure in Sydney’s northwest and used some of the proceeds to donate to the Liberals.

The most recent donation was $3000 to attend a budget reply lunch in May 2011.