Corrupt former Labor minister Eddie Obeid and his ally Joe Tripodi agreed to oust former premier Morris Iemma in return for a favourable deal for Obeid-linked company Australian Water Holdings, an inquiry has heard.

Peter Phillips, an independent certifier, told the Independent Commission Against Corruption on Tuesday he was pressured by AWH not to question excessive costs being billed by the company to the state-owned Sydney Water.

Ousted: Former premier Morris Iemma, while in office. Credit:Robert Pearce

He said former AWH chairman John Rippon told him ''political pressure was going to be applied very heavily to Sydney Water'' to give AWH contracts to run the installation of water and sewerage infrastructure in the north-west.

Mr Phillips said the ''clincher'' for him was being told by AWH employee Vass Kuznetsov around July 2008 that ''the Terrigals were going to move on Morris Iemma and have him removed as premier, and that part of the payment for their support of this was going to be a water licence for AWH''.