The NSW anti-corruption watchdog grilled then premier Gladys Berejiklian about any suspicions towards former Wagga Wagga MP Daryl Maguire during a secret hearing last month.
The Independent Commission Against Corruption (ICAC) revealed the private hearing on Monday as it launched its public inquiry into allegations against Ms Berejiklian relating to $35.5 million in grants for Wagga during her secret relationship with Mr Maguire.
Ms Berejiklian was specifically asked if she suspected Mr Maguire of corrupt conduct at the time of his resignation as a Parliamentary secretary in July 2018.
"I was in shock, I didn't know what to think. I didn't have enough detail," Ms Berejiklian told ICAC.
ICAC also heard from a public servant involved in evaluating the grant for the NSW Riverina based Wagga clay target function centre back in 2016, who described awarding the project $5.5 million as a "conflict of interest" by Ms Berejiklian.
ICAC laid out its plans on Monday for investigating allegations against Ms Berejiklian.
The Independent Commission Against Corruption (ICAC), on the first day of its new round of hearings, went over Ms Berejiklian's statements about Mr Maguire and their prior secret relationship that was revealed almost exactly one year ago.
A public servant involved in one of the grants, $5.5 million for a clay target function centre in Wagga, described how the application was given "unusual" treatment and rushed through in 2016 when Ms Berejiklian was NSW Treasurer.
The counsel assisting ICAC, Scott Robertson SC, in his opening address described the hearings' aim to find out whether Ms Berejiklian had breached public trust though conflicts of interest in the grants or through failing to report suspected corruption by Mr Maguire.
"Ordinarily, it is entirely a matter for the parties to a relationship to decide whether they disclose the existence of that relationship to anyone and, if so, to who," Mr Robertson said.
"However, there are circumstances in which a person's ordinary entitlement to privacy must be subordinated to their public duty. Put in another way, public duties come first."
Mr Robertson said ICAC had found multiple instances of Ms Berejiklian disclosing potential interests in people applying for NSW government positions and abstaining from discussions on the appointments.
"So far as the material presently available to this commission reveals, Ms Berejiklian never gave a disclosure under the NSW Ministerial Code of Conduct in relation to Mr Maguire," Mr Robertson said.
Ms Berejiklian, who did not appear yesterday and is not listed to appear this week, has denied all wrongdoing and stated she has "always acted with the highest level of integrity".
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Mr Robertson revealed that Ms Berejiklian appeared before a private ICAC hearing on September 18.
People appearing before a private hearing are legally prohibited from revealing they have done so.
In a video presented to ICAC, Mr Robertson asked Ms Berejiklian whether in July 2018, after Mr Maguire had resigned as a Parliamentary secretary, she "suspected Mr Maguire had engaged in corrupt conduct".
"I didn't know. I was in shock. I didn't know what to think. I didn't have enough detail, I hadn't read what was happening. I don't remember what I thought at the time," Ms Berejiklian responded.
Mr Robertson's questions concerned the period immediately after Mr Maguire appeared at a separate ICAC hearing that revealed intercepted phone calls of him seeking commissions with a Canterbury councillor in a potential property development.
Under repeated questioning as to whether she had suspicion of corrupt conduct by Mr Maguire, rather than actual knowledge, Ms Berejiklian said "no".
Mr Robertson also quoted from an intercepted phone call between Mr Maguire and Ms Berejiklian during their relationship in which she told him she did not "need to know about" his business deals.
"I can't see that as anything but a conflict of interest. What was the rush and why were we doing this?"NSW Office of Sport director Michael Toohey
The first witness to be called was Michael Toohey, who was a director at the NSW Office of Sport in 2016, which was overseen by then Minister for Sport Stuart Ayres.
Mr Ayres took up the position as NSW Liberal Party deputy leader in the wake of Ms Berejiklian's resignation as Premier earlier this month.
Mr Toohey said he was given the "extremely unusual" task of preparing, over the course of just one day, a submission on the Australian Clay target Association's $5.5 million grant application to build a clubhouse and function centre in Wagga.
The submission was to go to the Expenditure Review Committee, which oversees major financial decisions and is normally chaired by the Treasurer, which was Ms Berejiklian at the time.
Mr Toohey said he had never before been asked to prepare such a document so quickly as it was the procedure to give a minimum of six days to prepare for a committee of cabinet, and this "definitely" had an impact on his ability to perform "due diligence".
"There wasn't any real design work in [the business case]," Mr Toohey said.
"There was no risk analysis, the economic analysis was optimistic, I will say .. it didn't stack up. It was based on an influx of international tourism."
Mr Toohey said the clay target centre application was presented in a way that it was "somehow related" to the Invictus Games, which did not involve shooting completions.
Mr Toohey claimed there was political pressure to "get it done" from Mr Ayres' office as well as from Ms Berejiklian, who put the clay target grant on the agenda for an expenditure meeting in December 2016.
Mr Robertson asked Mr Toohey if he was aware of Ms Berejiklian and Mr Maguire's relationship while the grant application was being handled.
"Absolutely not," Mr Toohey replied.
Mr Robertson asked if he would have done anything differently if he knew at the time.
"Absolutely ... I would have expressed my concerns initially through the executive structure and into the minister's office to say I thought this was problematic," Mr Toohey said.
"If that had not produced any meaningful results, I would have escalated to the secretary of the Department of Premier and Cabinet.
"If that had not produced a result, and I was very confident it would have, I would have raised it with [ICAC]."
ICAC Assistant Commissioner Ruth McColl asked Mr Toohey what his concerns would have been.
"Why are we pushing an allocation of funds through to a local member based on such scant and inadequate information, that didn't meet the NSW government's own standards and policies, to someone who was in a personal relationship with the Treasurer?" Mr Toohey said.
"I can't see that as anything but a conflict of interest. What was the rush and why were we doing this?"
Mr Toohey was briefly cross-examined by Sophie Callan SC, acting for Ms Berejiklian, who asked him to confirm there was political pressure coming from Mr Ayres' office.
The hearing will resume at 10am on Tuesday with Mr Toohey's former superior, Paul Doorn, as a witness.