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ICAC to look into Mike Gallacher

The Independent Commission Against Corruption will take a break while former NSW Police Minister is being investigated for 'serious electoral funding irregularities'.

PT1M18S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-37u12 620 349

In a stunning development, the corruption inquiry into alleged Liberal Party slush funds will be "suspended" next week while investigators examine new evidence implicating former Police Minister Mike Gallacher in potential "serious electoral funding irregularities".

Counsel assisting the Independent Commission Against Corruption, Geoffrey Watson, SC, applied on Tuesday for a suspension of Operation Spicer "to allow the investigative staff at the commission time to investigate more material which has come to hand in recent times".

"In light of speculation on the subject, it does seem an appropriate moment to say that these activities implicate the former minister Michael Gallacher," Mr Watson said.

Out: Mike Gallacher leaves NSW Parliament House on Friday.

Out: Mike Gallacher leaves NSW Parliament House on Friday. Photo: Dean Sewell

Under pressure from Mr Gallacher's barrister, Arthur Moses, SC, to reveal the evidence, Mr Watson said the commission had "sworn testimony from a reliable person implicating Michael Gallacher".

The ICAC started public hearings last week into allegations that former energy minister Chris Hartcher, fellow Central Coast MPs Chris Spence and Darren Webber and Hartcher staffers Tim Koelma and Ray Carter funnelled illegal donations from property developers and other sources into a secret Liberal Party slush fund.

Mr Watson made clear that "the suspension will not operate immediately" and the inquiry into the slush fund, a "sham company" called Eightbyfive, would be completed first.

Witnesses will give evidence this week as scheduled. The inquiry will also hear evidence next week from coal mogul Nathan Tinkler, whose property development group Buildev allegedly donated $66,000 to Eightbyfive.

Mr Hartcher and his associates - Messrs Spence, Webber, Koelma and Carter - are also expected to give evidence next week.

Mr Gallacher resigned on Friday following shocking allegations he was involved in a "corrupt scheme" with Mr Tinkler's associate, Buildev co-founder Darren Williams, for the company to channel illegal donations into Eighbyfive.

"Now that the allegation has been made, we want the evidence," said Mr Gallacher's barrister.

He added that the evidence would not support the allegations made against his client but "now the genie has been let out of the bottle...there have been serious consequences to the minister".

Mr Watson said he would not withdraw the allegations and the claims made against him by Mr Gallacher's barrister were "very serious" and should not have been made.

"At its heart, the commission is an investigative body and the public inquiry is simply one of its tools in conducting an investigation," Mr Watson said.

"Material has come to the commission which has led to further investigations. Those investigations have only reached a rudimentary phase but already they have established a strong prima facie case of serious electoral funding irregularities.

"I'm not going to say more about those because the investigations are ongoing and to reveal too much could compromise or jeopardise the operational aspects of the investigation."

Mr Watson said Mr Gallacher would not be called to give evidence next week because of his alleged involvement in other matters under investigation.

"It will probably also be necessary to recall some other witnesses as well," he said.

Commissioner Megan Latham said that after the suspension, which would start sometime next week, the inquiry would resume on August 4 and conclude within the month.

Mr Hartcher's barrister, Alister Henskens, SC, objected to the adjournment along with a raft of others.

He said Mr Hartcher had been subject to "personal abuse" from members of the public and any delay in the hearings would be unwelcome. He noted it would also be an unwanted distraction from the 2015 election campaign.

Liberal Senator Arthur Sinodinos's barrister also objected to the adjournment application.

Robert Newlinds, SC, said that the senator wanted this resolved as soon as possible as a "serious allegation of criminal conduct" has been made in the hearing "and we are very concerned it is hanging over his head".

Mr Newlinds said he did not want Senator Sinodinos's good name and reputation hanging in the balance over the coming months.

"This is an allegation of specific criminal conduct," said Mr Newlinds in his submission opposing the adjournment.

Senator Sinodinos was not mentioned in Mr Watson's opening address. But he is a former NSW Liberal Party treasurer and the inquiry has heard that an entity called the Free Enterprise Foundation was used by some members of party as a "means of washing and re-channelling donations made by prohibited donors".

Senator Sinodinos is expected to give evidence at some time after the adjournment.

"He is anxious for the inquiry to continue so that he can get on with his life," Mr Newlinds said.

Commissioner Latham rejected the submissions opposing the adjournment.

She said that reputational damage was an "unfortunate by-product" of the commission's work and political considerations, such as the effect of the inquiry on the 2015 state election, could not be taken into account.

To allow the commission to be influenced by political considerations would "fundamentally compromise it", the commissioner said.

She added that it was "fundamental to the work of the commission...that we allow the media access to all of the information".