The unfolding NSW Liberal Party donation scandal is set to threaten the party's chances at the polls, a veteran MP says.
Hours after state upper house member Charlie Lynn made his prediction that the "peddlers of influence, the snake-oil spivs that inhabit the party" would hurt public confidence in the Liberals, NSW Premier Mike Baird vowed to purge wrongdoers from his ranks.
"I don't care what political badge you have," Mr Baird said.
"If you have done wrong and if ICAC has shown you have done wrong, then I am your worst nightmare."
The Independent Commission Against Corruption (ICAC) is investigating claims former Liberal cabinet minister Chris Hartcher funnelled $400,000 in donations through "sham" company EightByFive, and that the secret donors were rewarded with political favours.
It is alleged Tim Koelma, a staffer of Mr Hartcher, asked his brother Eric to help him lodge a false corruption complaint against then Sydney Water managing director Kerry Schott, who was locked in a dispute with alleged donor Australian Water Holdings (AWH).
"Yay black ops!" Mr Koelma wrote as he sent damaging allegations about Dr Schott to his brother.
Counsel assisting, Geoffrey Watson SC, told the commission on Wednesday the term "black ops" usually referred to clandestine, illegal operations carried out by government agents.
But it had another meaning in Young Liberal circles.
"Black ops was what we lightheartedly called hard work, going out and putting up signs in the electorate," former Hartcher staffer and former Terrigal Young Liberals president Aaron Henry said.
"The vast majority of the work was Young Liberals, on ladders, climbing up telegraph poles."
Documents tendered to the commission show Mr Henry was even inspired to write a rule book for the Young Liberals' missions after watching the cult Brad Pitt film Fight Club.
"You do not talk about black ops," the rules began.
"If this is your first night at black ops, you have to slash."
Mr Henry agreed the "black ops" included bringing down political opponents' signs, and Mr Koelma would have been familiar with the term.
It's alleged that as part of the campaign against Dr Schott, Mr Hartcher's office went hunting for damaging information with a Freedom of Information request, but arranged for the request to be lodged by Mr Lynn to disguise its origin.
Mr Lynn - who is not accused of wrongdoing - told the commission he thought the request was about sharing the burden of the $30 application, and did not question it.
But he now realises he was used.
"The links to developers, the lobbyists on state executive, the peddlers of influence, the snake-oil spivs that inhabit the party ... they've actually fractured their integrity and that's going to take a long time to heal," Mr Lynn said.
"It's certainly going to make the election much closer."
He said full public election funding could be one way to restore faith in the state's political machine.
