The ICAC's report found that Mr Zanotto had engaged in corrupt conduct in his dealings with Mr Vellar on a number of occasions.

Mr Zanotto could face criminal charges of misconduct in public office and making a false statement or attempting to mislead the commission.

He did not return the Mercury's calls yesterday.

When Mr Zanotto became a councillor in March 2004, Mr Vellar pursued a "closer relationship" and the friendship steadily grew.

Mr Zanotto often sought property and development advice from Mr Vellar and the pair even considered establishing a retirement village together.

In August 2006, Mr Zanotto loaned Mr Vellar $150,000 to purchase a property.

In December 2004, Mr Vellar's company submitted an application to redevelop the North Beach Bathers' Pavilion.

Six months later Mr Zanotto voted against a proposal to scale back the project, and Mr Vellar afterwards admitted he had contacted Mr Zanotto before the council meeting for his "political support" and "assistance in the debate".

Commissioner Cripps said Mr Zanotto was aware of an obvious conflict of interest in the pavilion DA and deliberately concealed it when he knew he had a duty to disclose it.

In October 2006, the council received a report on a recommendation to rezone the Hills Trucks Sales site in Fairy Meadow from light industrial to the more flexible Enterprise Corridor.

On October 5, Mr Vellar called his project manager, Tessa Tohmey, and asked her to find out what uses were permitted under the Enterprise Corridor, referring to the Fairy Meadow site.

"A little birdie flew past ... and told me something," he told her.

Mr Zanotto later admitted to the commission that he passed on information to Mr Vellar.

The commission said both men "deliberately sought to use confidential council information ... for the purpose of seeking a financial benefit for themselves".

In January 2007, after the commission had executed a search warrant on Mr Zanotto's home, Mr Vellar told him there were ICAC people who had had him exonerated.

Mr Zanotto paid $120,000 to the "ICAC officers", actually conmen Ray Younan and Gerald Carroll, to help him.

The commission rejected Mr Zanotto's claim that he had paid the money under duress and out of fear for his family.