Cabinet secretary Arthur Sinodinos has been accused of potentially misleading Parliament by claiming he did not participate in discussions about using a Liberal-linked entity, the Free Enterprise Foundation, to circumvent NSW donations laws.

Senator Sinodinos was chairman of the NSW Liberal party's finance committee in when then party fundraiser Paul Nicolaou raised the prospect of using the federally registered FEF to accept donations from property developers.

Property developers had just been banned from donating to NSW state election campaigns from 2010, just ahead of the March 2011 poll.

In May, Senator Sinodinos was asked by Labor Senator Penny Wong: "Did the cabinet secretary ever participate in or witness discussions about the use of the Free Enterprise Foundation to channel and disguise donations by prohibited donors?".