Two of the key players in the Independent Commission Against Corruption's inquiry into Obeid-linked company Australian Water Holdings have fallen out spectacularly over a $1.3 million rural property.
Fairfax Media can reveal that Nick Di Girolamo, a prominent Liberal Party fund-raiser, sued his former business associate John Rippon over $685,000 he claimed he loaned to Mr Rippon to cover mortgage repayments on their Freemans Reach retreat, in the Hawkesbury region. But the former directors of AWH avoided airing their dirty linen by settling the case out of court on Friday.
The ICAC inquiry enters its third week on Monday with former Labor premier Morris Iemma expected to give evidence, following explosive claims last week that corrupt former Labor minister Eddie Obeid and his political ally, Joe Tripodi, agreed to oust him in exchange for a favourable deal for AWH.
But all eyes will be on Liberal senator and former AWH chairman Arthur Sinodinos, who will enter the witness box as early as Wednesday.
Senator Sinodinos has stepped down from his role as federal assistant treasurer while ICAC investigates alleged corruption at AWH, where he was a director from 2008 to 2011. There are no allegations of corruption being levelled against him.
Last week, former Sydney Water boss Kerry Schott told the inquiry she warned Senator Sinodinos as early as 2009 he could
be keeping ''dishonest'' company on the AWH board, and that the company was billing exorbitant expenses to the public utility.
The court dispute between Mr Di Girolamo and Mr Rippon - who once bought a racehorse together called Partner In Crime and previously raced a horse called Perfect Crime - marked a souring in their relationship.
The former AWH directors and their wives bought the property, known as Wellow Farm, for $1.25 million in 2006 and took out a mortgage to cover the bulk of the purchase price.
Mr Di Girolamo, a close associate of the family of Mr Obeid, claimed Mr Rippon and his wife Sheenah agreed to cover mortgage repayments on the farm.
He and his wife Jodie allegedly loaned the Rippons $850,000 to help cover the repayments, but had only been repaid $165,000. They wanted the balance of the loan repaid plus interest and costs, but the Rippons insisted the money was not a loan and they agreed to split the mortgage repayments. The terms of the settlement between the couples are confidential.
The ICAC inquiry has heard that Mr Di Girolamo and Mr Rippon were billing state utility Sydney Water for their extraordinary salaries at AWH.
It has heard that Mr Di Girolamo was receiving a salary of $1.1 million, plus bonuses, while Mr Rippon received $1.7 million per year for just two days work per week.
Former NSW treasurer Michael Costa, who was briefly the chairman of AWH and tried to rein in costs, described Mr Rippon as ''extraordinarily greedy'' when he gave evidence last week.
The inquiry has heard allegations Mr Di Girolamo facilitated ''regular payments'' to a slush fund linked to former NSW Liberal energy minister Chris Hartcher in exchange for favourable treatment from Mr Hartcher.
The ICAC inquiry into AWH is examining allegations that the Obeids bought a 30 per cent stake in the company from Mr Di Girolamo in October 2010 for $3 million.
The Obeids and Mr Di Girolamo are expected to give evidence at the commission that the arrangement was later converted into a loan.
But Mr Di Girolamo admitted in court documents that he ''procured the sale of certain shares in AWH'' in October 2010.