A New South Wales government staffer says Liberal MP Garry Edwards knew an envelope he received from a property developer ahead of the 2011 state election contained cash.
The Member for Swansea was asked at the Independent Commission Against Corruption (ICAC) about allegations that he was given hundreds of dollars in an envelope by the then mayor of Newcastle and property developer Jeff McCloy in 2010.
Mr Edwards, who has moved to the cross benches during he inquiry, has told the hearing he took the envelope but did not open it.
He said he thought it may have been something for a raffle.
"He (Jeff McCloy) said: 'Here's something to kick off your raffle'," Mr Edwards told ICAC.
The corruption watchdog heard Mr Edwards gave the envelope to one of his campaign colleagues, Max Newton, who has since died.
Mr Edwards was briefly dismissed from the witness box so ICAC could hear from senior government staffer John MacGowan.
Mr McGowan told the hearing about a conversation he had with Mr Edwards last month about the envelope and that the Swansea MP had indicated he knew it contained cash.
The inquiry heard Mr MacGowan advised Mr Edwards to inform ICAC before Mr McCloy was due to give evidence.
But Mr MacGowan said Mr Edwards' staffer did not believe there was any reason to tell ICAC because Mr Newton had died and could not dispute the matter.
"I said my experience is ICAC will find out," Mr MacGowan told the hearing.Londonderry MP denies knowledge of election funds
Earlier at ICAC, MP for Londonderry Bart Bassett repeatedly denied any knowledge of the source of tens of thousands of dollars given to his election campaign.
Counsel assisting the inquiry Geoffrey Watson SC asked Mr Bassett where the funds that paid for his 2011 election campaign came from.
Mr Bassett replied that he "had no knowledge of the donations".
"As I said, I stayed at arm's length," Mr Bassett said.
The MP, who stood aside from the parliamentary Liberal Party last week, was also grilled about how $23,500 came to be in his account.
He responded by saying that he had no knowledge of that money and that he thought it had gone to the Liberal Party head office.
Mr Bassett was the mayor of Hawkesbury in Sydney's north-west before being elected to State Parliament.
He was also asked whether his votes on development applications and rezoning matters were cast to benefit Nathan Tinkler's development firm Buildev.
Mr Bassett said that he made decisions based on council staff recommendations.
Mr Watson continued to ask Mr Bassett whether he could explain why Buildev would be donating to his election campaign while it had substantial development applications before the council.
Mr Bassett told the hearing he could not explain that and that council staff made an assessment based on planning policy.Buildev contractor contradicts evidence
Mr Bassett's evidence was contradicted by Buildev contractor Mark Regent, who followed the politician in giving evidence.
Mr Regent told the inquiry the then Hawkesbury mayor approached him about donations for his 2011 state election campaign.
He said Mr Bassett expressed difficulties in raising funds and asked him if there was any way Buildev could help.
Mr Regent said when he told Mr Bassett that Buildev could not, Mr Bassett then asked him to talk to Buildev co-founder Darren Williams.
Mr Regent said he passed on the message and was told by Mr Williams, "Bart's OK," the inquiry heard.
The contractor was also questioned about specific donations, in particular a $5,000 payment.
He said "we [Buildev] were supporting the Liberal Party because they supported a development".
He also said Mr Bassett rang a few times to say thank-you for the donations.Former police minister avoids responding to funding allegations
Former police minister Mike Gallacher has avoided responding to allegations that he was at the heart of a scheme to provide funding to the 2011 election campaigns of two Liberal MPs.
Mr Gallacher was the last witness to give evidence at ICAC on Wednesday.
Mr Watson put to Mr Gallacher that he developed a scheme to create a pool of money to fund the activities of Liberal MPs Darren Webber and Chris Spence, and ex-government staffer Tim Koelma during the 2011 election campaign.
The two Central Coast MPs have said they will not stand at the 2015 state election after they were named at ICAC in relation to alleged Liberal Party slush funds.
Earlier at ICAC Mr Koelma was alleged to have set up the NSW Liberal Party slush fund Eightbyfive.
Mr Gallacher's lawyer objected to the question and the hearing was adjourned before the witness could reply.
Earlier, Mr Gallacher denied he had organised for developer Hilton Grugeon to pay the expenses of Luke Grant who was working in the office of former Newcastle MP Tim Owen.
Mr Gallacher will continue giving evidence tomorrow.