Pamphlets for a campaign to sink then-sitting NSW Labor MP Jodi McKay came from a printer owned by ex-Labor minister Joe Tripodi and were funded by businessman Nathan Tinkler, a corruption inquiry has heard.
Newcastle solicitor Nick Dan told the Independent Commission Against Corruption (ICAC) on Monday he was informed of the scheme by Anne Wills, a close associate of Mr Tripodi.
She also told Mr Dan of a police investigation of the campaign funding in the lead-up to the 2011 NSW election, the inquiry heard.
"(She said) `Nick, the police have tracked it down to Joe Tripodi's printer. The pamphlets were funded by Nathan Tinkler'," Mr Dan said.
Earlier, Ms Wills had sent a text to Darren Williams, who worked for Mr Tinkler's company, Buildev.
"Call me when you can ... Nick has spoken to the cops," Ms Wills texted on May 6, 2011.
Building developers, such as Mr Tinkler, are banned from donating to political parties under NSW law.
Ms McKay lost the seat of Newcastle in 2011 to the Liberal party's Tim Owen, who resigned from parliament last week amid a storm of controversy after he admitted to ICAC he took $10,000 in cash from Newcastle mayor and developer Jeff McCloy.
ICAC has heard Mr Tinkler wanted to build a coal port in Newcastle, which Ms McKay opposed.
Mr Tinkler has previously been accused of working with Mr Tripodi to depose Ms McKay after she refused to accept a bribe.
Also on Monday, Newcastle restaurateur Rolly de With denied knowing Mr Tinkler's company had donated $50,000 to the Newcastle Alliance, a group of local businessmen who decided to support the anti-Labor Fed Up campaign before the election.
Deputy chair of Newcastle Alliance, Tracey McKelligott, said she was shocked when she found out the body had given $60,000 to the Fed Up campaign.
ICAC has heard the money was funnelled to the alliance by Mr Tinkler, who was banned from donating to political parties because of his property development interests.
Ms McKelligott said she first became aware of how much money the alliance had given the Fed Up campaign when a Newcastle Herald journalist rang her.
"I didn't know. I wasn't advised. I was shocked," she said.
"(I was) hurt, shocked, disappointed. At that point in time I was the deputy chair."
Revelations at ICAC this year have led to the sidelining of nine NSW Liberal MPs, with Mr Owen and Charlestown MP Andrew Cornwell quitting parliament last week after admitting to accepting money from developers.
By-elections will be held in the seats on October 25, but the Liberals won't contest either seat.
Developer Jeff McCloy has stepped down as Newcastle mayor over the ongoing donations scandal.
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