A company at the centre of a corruption inquiry and linked to crooked former powerbroker Eddie Obeid made multiple donations to the Liberal Party, including $10,000 to Joe Hockey's federal electorate committee in 2010 - just weeks before that year's election.
The link is the first evidence tying Australian Water Holdings (AWH) to the federal Treasurer and is revealed in the Australian Electoral Commission's ''Donor to Political Party Disclosure Return - Organisations'' report for the financial year, 2010-11.
The donation of AWH to the ''North Sydney FEC'' was by far the largest single donation to an electorate fund made by AWH, although another gift of $10,000 was made to the National Party of Australia based in Canberra and a donation of $30,000 was paid to the Liberal Party NSW Division in December 2010.
The donation to North Sydney FEC was paid back in February 2013, in the sum of $11,000 ($10,000 plus GST) after reports began to circulate about corruption concerns at AWH.
Amid a gathering storm that could yet claim the scalp of Assistant Treasurer Arthur Sinodinos, who was both a director/chairman of AWH and an executive office holder of the NSW division of the Liberal Party, a decision was taken on Monday to repay all donations.
''In light of evidence at the ICAC hearing called Operation Credo, the Liberal Party of Australia (NSW Division) has decided to cancel donations from Australian Water Holdings,'' the NSW division advised in a statement from acting state director Simon McInnes. ''The amount of $75,636 will be refunded to Sydney Water.''
The revelation is one of many previously unknown dealings by AWH as it attempted to cement links with key political figures and position itself to secure lucrative public contracts worth hundreds of millions of dollars with Sydney Water.
It has also been reported that Senator Sinodinos was involved in negotiations to sell a $15 million stake in Australian Water Holdings to investors involved in a secret coal venture with the family of corrupt Labor faction leader Eddie Obeid.
Senator Sinodinos met lawyer John McGuigan on February 25, 2011, to discuss the sale of a stake in the company, according to a diary entry. Chief executive Nick Di Girolamo and Eddie Obeid junior were also present, according to documents tabled at the NSW Independent Commission Against Corruption inquiry on Tuesday, according to The Australian Financial Review.
On Tuesday, Prime Minister Tony Abbott gave his unqualified support to Senator Sinodinos, describing him as a long and faithful servant of the Parliament.
The NSW Senator had been a director of AWH and then its chairman, receiving a $200,000 salary, for what counsel assisting the Independent Commission Against Corruption described as opening up communications with the Liberal Party. He had also been treasurer of the NSW division of the Liberal Party and, subsequently, its state president.
''The short answer is yes,'' Mr Abbott said when asked by the opposition during question time if the minister retained his support.
Mr Abbott stressed that the matters before the NSW ICAC related to events prior to Senator Sinodinos' entry to Parliament.
''There are important matters being investigated by the NSW [ICAC] in respect of Sinodinos; the matters in question happened prior to his entering Parliament and becoming a minister,'' he said.
He stood by comments he made six months ago that he would not appoint Senator Sinodinos to a ministry ''if there was any cloud hanging over him''.
In the Senate question time, Labor senator Penny Wong asked Senator Sinodinos whether he had abided by ministerial standards in his dealings with the Obeid-linked AWH. She questioned whether he opened doors to the Liberal Party in his role on the board of AWH.
Senator Sinodinos said he could not comment on the matters before ICAC. ''Watch this space,'' he said. ''I will be vindicated.''
At the end of question time, Senator Wong made a statement saying the chamber had witnessed a ''cover-up'' by the government.
''You would have thought [Sinodinos] would have taken the opportunity in question time today to front the Australian people.''
She described Senator Sinodinos' previous statement to the Senate as ''inadequate at best and deliberately obfuscating at the worst''.
Liberal senator Simon Birmingham said it was outrageous that Labor had tried to ''operate some sort of kangaroo court'' to smear the Assistant Treasurer.
With Lisa Cox and Jonathan Swan