Former Labor Premier Morris Iemma has told a corruption inquiry that crooked former minister Eddie Obeid lobbied him about infrastructure company Australian Water Holdings without revealing it had links to his family.
Mr Iemma told the Independent Commission Against Corruption on Monday that Mr Obeid called him in 2008 and asked him to intervene to ensure public utility Sydney Water continued to deal with AWH.
"Did he tell you anything about the CEO of the company being his son's best friend?" counsel assisting the commission, Geoffrey Watson, SC, said.
"No," Mr Iemma replied.
The commission is investigating allegations the Obeids bought a 30 per cent "secret shareholding" in AWH in 2010 and stood to make up to $60 million from a public-private partnership between the company and the state government.
The chief executive of the company was prominent Liberal Party fundraiser Nick Di Girolamo, a schoolfriend of Mr Obeid's youngest son Eddie junior.
The inquiry heard explosive allegations last week that Mr Obeid and his political ally, Joe Tripodi, agreed to oust Mr Iemma as premier in return for a PPP for AWH.
Mr Iemma said on Monday he was ousted after a "long-running leadership tussle". He said he had "not heard any rumours" that his forced resignation was linked to a deal for AWH.
"If there were to be a payoff for any quote move unquote [against you], who would give it?" counsel for Mr Obeid, Stuart Littlemore, QC, said.
"I don't know," Mr Iemma replied.
Mr Littlemore suggested there was "nothing wrong" with Mr Obeid attempting to ensure AWH was treated fairly.
The inquiry has heard allegations that Australian Water was secretly charging Sydney Water for millions of dollars in expenses under an existing contract to provide water and sewerage infrastructure in Sydney’s north-west.
The public utility became suspicious about the costs and tried, unsuccessfully, to break the contract with AWH.
Mr Watson tendered "hard core evidence" on Monday that AWH had charged the company for chauffeur-driven limousines and luxury hotels for Mr Di Girolamo and Eddie Obeid junior.
The inquiry has heard Eddie junior joined the company on a salary of $350,000 a year.
Mr Di Girolamo also billed Sydney Water to attend the Italian Chamber of Commerce's Gala Ball in 2008, and the company charged thousands of dollars in legal fees relating to an attempt to get an injunction against Sydney Water.
Mr Watson said that on the basis of the documents he had reason to "drop the F-word: fraud".