One of the Liberal Party's most senior former fundraisers has revealed that when allegedly prohibited donations were made to the party, he knew it was happening.

Key points: Michael Yabsley calls for reform of Australia's electoral funding system

Michael Yabsley calls for reform of Australia's electoral funding system In 2010 allegedly prohibited donations were channelled through Free Enterprise Foundation

In 2010 allegedly prohibited donations were channelled through Free Enterprise Foundation Arthur Sinodinos repeats denial of involvement

Up to now, no senior federal Liberal Party official has admitted their knowledge of this practice.

Michael Yabsley, who served as the party's honorary federal treasurer from 2008 to 2010, is calling for root-and-branch reform of Australia's current system of electoral funding.

"I believe this is now crunch time. You have the damage that has been done to the reputations of many, many individuals, to the reputations of many companies and the reputations of the major political parties," he told Four Corners in an exclusive interview that will air tonight.

"It all points to the absolute case to do away with the system of political fundraising that we currently have."

In 2010, allegedly prohibited donations from property developers were channelled through a federal entity, the Free Enterprise Foundation (FEF), back to the Liberal Party in New South Wales. Mr Yabsley was the party's federal treasurer at the time.

He said at the time, he was "sanguine" about what the FEF was doing.

"Now looking back on it … those practices are not acceptable and should not have been acceptable in the past," he said.

Mr Yabsley was asked by Four Corners if he was aware at the time that donors who were prohibited from donating in New South Wales were being asked to do so through the FEF.

"In a couple of cases, yes, and you know there we're talking about property developers, owners of certain licensed premises," he said.

"Yes, I don't think it was a great secret about the fact that that was happening."

In NSW, the Independent Commission Against Corruption (ICAC) is investigating allegations certain members of Parliament and others solicited and failed to disclose political donations from companies, including prohibited donors, contrary to the Election Funding, Expenditure and Disclosures Act 1981.

When asked if the practice struck him as lawful, Mr Yabsley replied: "It struck me as being something that had been happening over a long period of time, and there was no particular reason to suggest that it was unlawful in a way that was different with what had been done in the past."

'I have never been involved in such activity': Sinodinos

Mr Yabsley's frank admission of his own knowledge of prohibited donations being channelled through the FEF contrasts with statements made by the NSW Liberal Party's state treasurer at the time — Senator Arthur Sinodinos.

In evidence to the ICAC he said: "I don't accept any responsibility for money being raised from prohibited donors."

And in an exchange with Four Corners, he said: "I condemn any situation where people may have broken the law, absolutely. Whatever the situation, whether it is state elections, federal elections, whether it's Labor Party, Liberal Party, whatever.

"And I certainly have never condoned or been involved in such activity."

Mr Yabsley told Four Corners that Senator Sinodinos was "one of the finest people who's been involved in the political process both as a staff member and as an elected representative".

"Arthur has paid a very heavy price in relation to matters that frankly are up until now, still unresolved," he said.

Mr Yabsley himself was not directly responsible for how the FEF operated.

The foundation's trustee Anthony Bandle declined an invitation to appear on Four Corners.

In a statement, the foundation denied it had ever broken the law or breached its regulatory requirements.

It said the gifts it received were not political donations and the funds were not subject to the direction of the original donor.

ICAC's final report into the prohibited donations scandal is expected to be published soon.

Watch Four Corners: Money and Influence on ABC TV at 8:30pm.