Former University of New England (UNE) chancellor John Cassidy had a long phone conversation with business partner Darrell Hendry the day before Mr Hendry lodged the winning bid for a pub the university was selling, a corruption inquiry has heard.
The Independent Commission Against Corruption (ICAC) is investigating allegations Mr Cassidy improperly used confidential information to buy into a historic hotel being sold off by UNE.
Mr Cassidy denied any ongoing relationship with Mr Hendry when Mr Hendry emerged as a bidder for the Tattersalls Hotel, located in Armidale, in 2005.
The hotel was sold in December that year in an asset liquidation by the financially distressed student union.
Mr Hendry won with a late bid of $2.65 million that trumped three lower bids received during a closed tender.
Evidence presented to ICAC has revealed that Mr Hendry was in fact a long-term business partner of Mr Cassidy's and a co-director in a company, Vercot, that Mr Cassidy used to take up a stake in the Tattersalls.
Mr Hendry was confronted with telephone record evidence on Tuesday that he took a half-hour long phone call from Mr Cassidy on 1 December 2005, the day before he lodged his bid.
Asked what the conversation had been about, Mr Hendry told the commission he could not recall.
Mr Hendry said he believed, at that stage, that he did not have a partner in the bid and was acting alone.
The response prompted a warning from Commissioner Megan Latham that the ICAC may make inferences based on the evidence Mr Hendry gave.
"You need to take into account that the inference is very strongly available that the half-hour conversation on the 1st of December was in fact about the level of the bid and what should be tendered," Ms Latham said.
"And that that discussion took place with the expectation that Mr Cassidy was going to be a partner in the purchase - that's the inference that's available from those circumstances."
Mr Hendry responded: "I think that's a fair enough inference".
Mr Hendry told the ICAC he had not spoken with Mr Cassidy for some months when he received a telephone call from him about the hotel in November 2005.
"He said it was a good investment," Mr Hendry told the inquiry.
Mr Cassidy and Mr Hendry had a long shared work history as executives at construction company Abigroup and Mr Hendry said he might have joked with his colleague in the past that he would buy a pub when he retired.
But, he told the commission, he had not been serious, had no experience in hotels or regional businesses and was years away from retirement at the time.
Mr Hendry agreed with counsel assisting the commission Anna Mitchelmore that, in terms of location, the Armidale pub was a more convenient investment for Mr Cassidy, who had a farm near the regional city, than it was for himself.
The inquiry has heard that Mr Cassidy announced to UNE that he was a shareholder in the pub in January 2006, having decided just a day earlier to invest.
ICAC is investigating allegations that Mr Cassidy misled the university about his involvement in the hotel deal and whether he complied with his obligations as chancellor.
The inquiry is also examining whether any of his behaviour involved misconduct in public office.
The hearing continues on Wednesday.
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