The ICAC hearing heard that Ms McCarthy was dismissed from the deputy commissioner’s role last May 14 after uncovering a series of issues about the work performance of fellow deputy commissioner Steven Pearce.

Before she was sacked, Ms McCarthy criticised the management of the SES Commissioner Murray Kear and Mr Pearce.

The ICAC inquiry, before ICAC Commissioner David Ipp QC,  is examining whether Mr Kear improperly showed favour to Mr Pearce by failing to appropriately investigate allegations made by Ms McCarthy that Mr Pearce had engaged in corrupt behaviour.

It is also alleged that Mr Kear made false statements and attempted to mislead ICAC officers in their investigation.

Michael Fordham SC, counsel assisting the commission, further alleged that Mr Kear failed to recognise, disclose and manage a conflict of interest arising out of his friendship with Mr Pearce in connection with the hiring, managing, performance management and investigation of Ms McCarthy.

"The two men and their families holiday together," Mr Fordham said.

The inquiry heard that Mr Kear assumed his role with the SES in 2008 after transferring from senior management in what is now known as the NSW Fire and Rescue.

Mr Pearce was also a former officer of NSW Fire and Rescue. The two men have known each other from at least 2006.

"Deputy Commissioner Pearce, in an email to Commissioner Kear, describes him as ’a very authentic mate and a good boss’ and notes that those factors were ’probably the two major reasons I left the firies that I love’," Mr Fordham said.

The inquiry heard that Ms McCarthy was employed in mid 2012 to undertake a review of all procurement contracts to ensure legislative compliance.

The terms of her agreement also included recasting existing budget allocations to achieve corporate overtime savings based on increased governance frameworks, ensuring that overtime was pre-approved and paid in accordance with award conditions.

Mr Fordham said during Ms McCarthy’s nine months of employment she highlighted five key areas which drew the attention and ire of Mr Kear and Mr Pearce.

Those areas included an investigation into the activities of former chief financial officer Kevin Pallier who was terminated in suspicious circumstances. M Kear terminated Mr Pallier's employment for abuse of overtime – all of which had been authorised by Mr Pearce - alleged insubordination and his travel and working arrangements (the inquiry heard that Mr Pallier undertook unfair dismissal proceedings and has since been re-instated to the SES). Mr Pallier was not named as a person of interest at the inquiry, nor called as a witness.

She also investigated compliance with procurement standards - in particular two consultancy contracts entered into by SES with third parties that had been commissioned by Mr Pearce.

"Both contracts did not comply with the relevant procurement guidelines established by the NSW Government," Mr Fordham said.

Ms McCarthy further raised the use of corporate credit cards by Mr Pearce for non-approved expenditure; potential abuses of travel allowances by Mr Pearce; and the potential falsification of evidence by Mr Pearce that was used against Mr Pallier in support of his termination.

"This presented Commissioner Kear with a problem," Mr Fordham said. "Diligent investigation by one of his Deputy Commissioner’s  was exposing issues with the other that were, at the very least, manifestations of incompetence," Mr Fordham said.

Ms McCarthy also made changes that altered SES employees right to overtime, the use of motor vehicles, parking and travel.

"Not surprisingly this created some disquiet amongst the employed ranks of the SES," Mr Fordham said.

"Just prior to her dismissal, Ms McCarthy had criticised Deputy Commissioner  Pearce. She had also, and in open forum, criticised the management abilities of Commissioner Kear and in particular in relation to his handling of Steven Pearce.

"Commissioner Kear openly stated that one or both of his deputies had to go.

"He chose Tara McCarthy."

She was then dismissed by Mr Kear on the basis that he had lost trust and confidence in her.

On May 14, Ms McCarthy was escorted from the SES building in Wollongong.

"The evidence suggests that the decision had been well and truly made in the days prior and that the interview was an exercise in formality.

"No opportunity for comment was realistically made. Procedural fairness was not afforded.

"It is telling that a cab had already been arranged to take Ms McCarthy home."

Ms McCarthy took her concerns to ICAC.

"The ability of people within the public sector to raise issues of potential corruption and mismanagement is paramount to the efficient administration of NSW," Mr Fordham said.

"It is for that reason that this public inquiry will examine these matters, and in particular, the termination of Ms McCarthy who appears to have done what we would all hope people in positions of authority within the public sector would do when confronted with similar problems and scenarios."

SES employs approximately 329 full or part-time staff and has 10,000 volunteer members.

"The SES’s reputation was built on the hard and selfless work of volunteers who gave (and give) freely of their time to assist their communities," Mr Fordham told the inquiry.

"In essence, it is the embodiment of many of the values a contemporary Australia purports to uphold; tolerance, lending a helping hand, sticking together in tough times and mateship.

"The evidence suggests that Commissioner Kear allowed the importance of that last value, mateship, to permeate the manner in which he administered a significant public entity and managed the issues raised by Ms McCarthy."

The inquiry is expected to last up to two weeks.