Former NSW Labor minister Tony Kelly has admitted he signed off on a cabinet minute favouring a company linked to the Obeid family but denied he "wilfully turned a blind eye" to mistakes in the document.
In a tense morning at the Independent Commission Against Corruption, Mr Kelly said the cabinet minute was drafted by his Labor colleague Joe Tripodi, then a backbencher, and advisers from their offices.
"I signed it and I put it forward," Mr Kelly said. "The others ... produced it."
Tony Kelly, former state Labor minister arriving at the ICAC inquiry. Photo: Rob Homer
The commission is investigating allegations that Mr Kelly and Mr Tripodi doctored a cabinet minute to "completely reverse" a recommendation to reject a proposal by infrastructure company Australian Water Holdings for a public-private partnership.
The inquiry has heard the Obeid family was "secret stakeholders" in AWH and stood to make up to $60 million from the PPP.
Mr Kelly told the inquiry he did not read the original cabinet minute but he admitted in a private interview with ICAC that it was his "ministerial decision" for a new minute to be produced and submitted to cabinet.
The re-drafted minute removed financial information about AWH and included statements about Mr Kelly's view on expected financial returns.
Counsel assisting the inquiry, Geoffrey Watson, SC, suggested to the former minister that he "wilfully turned a blind eye to the errors contained in this document because you wanted to promote this deal with Australian Water Holdings at all costs".
"That is not true and you know it", retorted Mr Kelly.
"Do you accept that the cabinet minute which you signed contained highly misleading information?" asked Mr Watson.
Mr Kelly conceded the cabinet minute "could have contained more information".
Mr Kelly agreed he was unaware at the time if the proposal was worth $10,000 or $10 million.
He also did not know how many employees AWH had, or if it had more than $2.
Brian McGlynn, an expert retained by the Department of Premier and Cabinet, has previously given evidence that he prepared the cabinet minute rejecting AWH's bid for the PPP.
The Obeid-linked infrastructure company told the state government it was worth up to $200 million but Mr McGlynn estimated it had assets worth only $36 and was not good value for taxpayers.
Mr McGlynn was asked to rate the PPP out of five stars in the style of "the movie show with David and Margaret". He gave it "half a star maybe", adding "maybe Margaret [Pomeranz] would agree or disagree, she often has strange views".
Mr Kelly said he was shocked when early last year Mr Tripodi knocked on the door of his Wellington home with a hamburger and a coffee in each hand.
Mr Kelly said that Mr Tripodi's visit was unannounced but he invited him in because "that's what country people do".
The inquiry heard that 98 per cent of the conversation was what their former parliamentary colleagues were doing post politics.
Although Mr Kelly doesn't "like talking about Frank Sartor", the topic of conversation turned to him. Mr Tripodi said of Mr Sartor, "He's spending his time writing a book bagging out the Labor party, that's what he's doing," Mr Kelly recalled.
Mr Kelly said that was how the topic of Australia Water minute was changed because Mr Sartor had raised it in his book.
Mr Tripodi also raised his new interest, which was "lucerne farming". He then finished his hamburger and left. Mr Kelly told the inquiry Mr Tripodi's visit lasted between 20 and 30 minutes.