Eddie Obeid: Found to have acted corruptly by ICAC. Photo: ABC TV

The coal licences at the centre of two sensational corruption probes involving former Labor figures Eddie Obeid and John Maitland are set to be torn up and the profits confiscated following recommendations by the state's corruption watchdog.

In a report on Wednesday, the Independent Commission Against Corruption said the government should cancel a lucrative coal exploration licence over the Obeid family's farm at Mount Penny in the Bylong Valley.

Commissioner David Ipp, QC, said a separate licence given to a company chaired by former union boss John Maitland should also be cancelled.

Corrupt: John Maitland leaves ICAC after a day of questioning in May.

John Maitland leaves ICAC after a day of questioning in May. Photo: Peter Braig

The licences were "so tainted by corruption" that they "should be expunged or cancelled and any pending applications regarding them should be refused", the ICAC said.

It said the government should also pass laws giving it the power to confiscate profits made by those with knowledge of the corrupt conduct, as well as to "compensate any innocent person" affected by the cancellation of the licences.

The state government passed changes to mining laws last month to allow coal exploration licences to be cancelled on public interest grounds.

Ian Macdonald

Ian Macdonald: facing potential criminal charges. Photo: AFR

The Premier, Barry O'Farrell, said on Wednesday: "On the basis of legal advice, we will be giving those who hold those leases until the 15th of January to show cause why those recommendations shouldn't be put in place. The government will then consider its options."

Mr O'Farrell said he welcomed the recommendations, and "hopefully the implementation of these recommendations in one form or another will see an end to this sorry saga of Labor corruption".

But he said he did not want to be a commentator on ICAC because "I don't intend to open the state up to any more legal action".

The report marks the final chapter in the ICAC's historic investigation of the coal deals, which included explosive public hearings between November last year and May.

The commission found earlier this year that former Labor mining minister Ian Macdonald corruptly agreed in 2008 to create a coal tenement over the Obeids' farm. The family made $30 million from the deal and stood to make millions more.

Mr Macdonald, along with Mr Obeid and his middle son, Moses, face potential criminal charges as a result of the findings.

Five of the founding investors in Cascade Coal, a private company that was given the right to explore for coal over the Obeids' property, also face potential criminal charges.

The ICAC found coal mogul Travers Duncan, RAMS Home Loans founder John Kinghorn, lawyers John McGuigan and John Atkinson, and investment banker Richard Poole, acted corruptly by concealing the Obeids' involvement in the tenement from officials.

The commission also found Mr Macdonald acted corruptly by issuing a Hunter Valley coal licence to Doyles Creek mining, a company then chaired by his "mate", Mr Maitland, at a lavish dinner in December 2008.

Mr Maitland's business associates, Newcastle entrepreneurs and Doyles Creek Mining co-founders Craig Ransley and Andrew Poole, were also found corrupt and all four men face potential criminal charges.

The Doyles Creek exploration licence is now owned by listed company NuCoal, which was a shell company when it bought Doyles Creek Mining in 2010.

Mr Maitland, a former national secretary of the Construction, Forestry, Mining and Energy Union, made more than $5 million when he sold shares in NuCoal after it bought Doyles Creek. He still owns shares in the company that were valued at $9 million in December 2011.

The Premier has previously said NuCoal has run a "pointless" media campaign to influence the government's decision about the licence.

With Jacob Saulwick