Eddie Obeid lobbied former NSW treasurer Eric Roozendaal for special treatment in regard to leases in which the Obeid family held an interest, the state's corruption watchdog has heard.
Mr Roozendaal told the Independent Commission Against Corruption (ICAC) he was unaware Mr Obeid's family owned properties at Circular Quay.
The ICAC is investigating allegations Mr Obeid lobbied several state ministers to have leases on government land at Circular Quay renewed without going to public tender after their expiration in August 2005.
The Obeids ran two restaurants and a cafe at the harbour through a company owned by a family trust, with associate and relative John Aboud acting as the face of the business.
During his time at NSW parliament from December 2004 until March 2011 Mr Roozendaal held several senior portfolios, including ports and treasury.
He also was a member of Mr Obeid's Terrigal faction.
Mr Roozendaal was ports minister from August 2005 to February 2006, and was ultimately in charge of policy governing the retail leases in which the Obeids had secret interests.
It was while he held this portfolio that Mr Obeid made representations to him on behalf of the lessees.
"He felt they were being poorly treated because they had invested a lot of goodwill into their businesses in the lead up to the Olympics," Mr Roozendaal said, recalling a conversation that likely took place in Mr Obeid's office.
"And that they felt that they should, if there was going to be a market evaluation of their leases, they should get the first right of refusal."
Counsel assisting the commission Ian Temby then asked "did you understand him to be urging that case upon you?"
"Yes," Mr Roozendaal replied.
Earlier on Thursday the ICAC heard Mr Obeid had also told Joe Tripodi, who took over the waterways portfolio from Mr Roozendaal, he wasn't happy expressions of interest would be sought for the leases.
Mr Tripodi's former deputy chief of staff Lynne Ashpole said her boss had told her of discussions he had with Mr Obeid.
"My memory of his exact words were that Mr Obeid wasn't very happy with him for wanting to have an expression of interest process," she said.
Mr Tripodi was initially in favour of putting the leases out to tender when they were to be renewed, Ms Ashpole said.
The decision to seek expressions of interest was later suspended until direct negotiations with tenants for ten year fixed terms were offered in July 2008.
Mr Obeid's lawyer Stuart Littlemore argued that his client "had a go" at Mr Roozendaal on behalf of retailers in general and only mentioned the Circular Quay leases as an example.
"Mr Obeid's position is `I had a go at Eric about retail leases, generally, yes I had a go at Eric about the way the retail lease regime was working at Circular Quay'," Mr Littlemore said.
"(He) did that because (he) was speaking in general about unfairness. (He) didn't want to disclose to (Mr Roozendaal) that here was a family interest because he might have felt compromised."
The hearing continues before Assistant Commissioner Anthony Whealy.
Mr Tripodi is expected to appear on Friday.
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