Stench of corruption wafts through Libs

From Hog's Breath Cafe to the halls of power, a corruption inquiry has this week shown the casual nature of political corruption in NSW.

From a Hog's Breath Cafe worker to a side of high-ranking Liberal party officials and property developers - the Independent Commission Against Corruption (ICAC) this week again served up evidence of casual corruption in NSW politics.

Liberal MP Andrew Cornwell's political career is cooked - his handling of a brown paper bag stuffed with $100 bills and a sham $10,000 painting sale to a property developer is hard to ignore.

And the stench from the inquiry into allegations Liberal party members figures tried to circumvent NSW fundraising bans ahead of the 2011 state election has wafted from the Charlestown office of the previously low-profile Dr Cornwell to the upper echelons in Canberra.

Federal Liberal Party director Brian Loughnane - husband of the prime minister's chief of staff Peta Credlin - was dragged into the inquiry when the ICAC was shown an email written by federal Liberal executive Colin Gracie to then-NSW Liberal party finance director Simon McInnes said.

The July 2010 exchange suggested Mr Loughnane allowed banned NSW political donations from developers to be funnelled through federal party channels.

The NSW Liberal Party rejects this, saying the email relate to a "potential donor", who was not a property developer, and any funds were intended for an election campaign in the federal seat of Banks in NSW.

However, much of the ICAC's attention this week has been on the relaxed nature of shady dealings at a local level in Newcastle.

Joshua Hodges, a former campaign staffer for departing Newcastle MP Tim Owen, told the ICAC he was well aware his $10,000 fee for three months of work for the 2011 state poll was being paid for by illegal means.

He said he was paid by property developer Nathan Tinkler's Buildev company and building suppliers Saddingtons, as part of a scheme to subvert electoral fundraising laws.

The money granted the developer access to Mr Owen, the part-time Hog's Breath Cafe employee told the inquiry.

But it did not grant them approval for projects, he said.

Mr Hodges said campaign manager Hugh Thomson told him to bill local business Saddingtons for his work.

"To cover part of my costs," Mr Hodges said.

"That was the donor that was going to be paying."

Developers have been banned from making political donations in NSW since 2009 but they can legally contribute to federal campaigns.

Tinkler has been lobbying for a coal terminal to be built in the Newcastle area.

The inquiry was also shown text messages and emails showing Buildev was slow to pay up, forcing Mr Owen to chase the money.

The latest round of corruption hearings had an immediate impact.

Shortly after counsel assisting Geoffrey Watson finished his opening address on Wednesday, Mr Owen and former NSW government whip Andrew Cornwell stood aside from the Liberal Party.

Dr Cornwell, a veterinarian, told the inquiry he accepted $10,120 from property developer Hilton Grugeon in a sham deal for a cheap, re-gifted painting and used the money to pay his tax.

Another $10,000, kept in a brown paper bag and allegedly handed to Dr Cornwell by property developer and now Newcastle mayor Jeff McCloy in the back of a Bentley in 2010, was eventually funnelled back to the Liberal party.

On Friday, Dr Cornwell released a statement stating that he would not be contesting next year's election and was taking leave from his parliamentary duties.

Mr Owen is due to give evidence on Monday.

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