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Limousines, pole dancing: Michael Costa tells ICAC inquiry that AWH expenses were 'out of control'

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Michaela Whitbourn, Kate McClymont

Former NSW treasurer Michael Costa leaves an ICAC inquiry into Australian Water Holdings.

Former NSW treasurer Michael Costa leaves an ICAC inquiry into Australian Water Holdings. Photo: Edwina Pickles

Former NSW treasurer Michael Costa has told a corruption inquiry that pole dancing was among the "staggering" expenses charged by an Obeid-linked company to the state-owned Sydney Water.

Giving evidence on Thursday, Mr Costa said Australian Water Holdings director Peter Canaway made it "very clear" the company was racking up huge administrative expenses.

Asked what sort of expenses had been discussed, Mr Costa said: "Limousines, I think he did mention pole dancing, I didn't know what that was all about.

"It was clear that the expenses were out of control."

Mr Costa was appointed chairman of AWH in November 2011, replacing federal Liberal Senator Arthur Sinodinos. He resigned a year later and is not accused of any wrongdoing.

The commission is investigating allegations that the family of corrupt former Labor minister Eddie Obeid had a secret 30 per cent shareholding in AWH, and that Mr Obeid inappropriately lobbied colleagues to favour the company.

Sydney Water had contracted AWH to manage the rollout of water and sewerage infrastructure in the north-west, and had agreed to cover administrative costs.

The public utility became suspicious about how the money was being spent but the company stonewalled requests to inspect its books.

Mr Costa gave evidence that Mr Obeid facilitated meetings with him and AWH when he was treasurer.

He told the inquiry that his view at the time was that AWH had "Buckley's chance" of securing a PPP with the state government.

He was sypathetic to the views of Sydney Water, which was trying to break commercial ties with AWH.

Mr Costa said he was aware Eddie Obeid junior was employed by AWH, but the family did not tell him it had a financial interest in the company apart from a "loan" secured against shares.

Mr Costa agreed there was some bad blood between him and Mr Obeid senior upon leaving parliament in 2008, but he later agreed to join the board of AWH after a meeting with the former Labor powerbroker.

He said the meeting took place after Mr Obeid called to offer his condolences about a home invasion.

"I'm not a hater," Mr Costa said.

But Mr Costa said he was "horrified" when he saw AWH's books and took steps to rein in the company's excessive costs, including cutting executive salaries almost in half.

He told the inquiry he was "annoyed" when he discovered the company's directors, including Obeid associate Nick Di Girolamo, had back-paid their salaries when they received a deperately-needed financial injection in January 2011.

At the time, the company could not pay its tax.

Mr Costa quipped that he felt like Winston Wolfe, the well dressed clean-up specialist in Quentin Tarantino's Pulp Fiction, as he attempted to tidy up the company's affairs.

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