The NSW Independent Commission Against Corruption is investigating alleged illicit political donations and branch-stacking spearheaded by the Reformers, a conservative Christian faction among state Liberals.
Former state minister Damien Tudehope was hauled in front of the commission on Tuesday where he answered to allegations made by long-time friend and hotelier Michael O'Hara.
Mr O'Hara previously told the commission he made thousands of dollars worth of donations to the Reformers group, used in part to fund recruitment events.
Mr Tudehope, who is not accused of wrongdoing, argued the donations were not illegal and said it was not clear they constituted a political contribution.
He also questioned if Mr O'Hara would be a prohibited donor.
"If you think for one moment I would expose Michael O'Hara to a circumstance where he would have to give evidence in this commission the way he had to," Mr Tudehope said.
"You think I would have done that in circumstances where I knew that he would be a prohibited donor? Not on your life."
Counsel assisting Peggy Dwyer pressed Mr Tudehope on an arrangement where Mr O'Hara's donations were funnelled through an advisory firm owned by Reformers member Christian Ellis.
The inquiry earlier heard Mr O'Hara was issued fake invoices which suggested his payments were for consultancy services.
Mr Tudehope said he struggled to see a reason why bogus invoices would have been issued for the donations.
"I have to say I just don't know why anyone would have engaged in that behaviour," he said.
Prior to the latest round of hearings, Mr Tudehope stood aside from his roles as shadow attorney-general and opposition youth justice spokesman over concerns his involvement would be a distraction ahead of the March state election.
Mr Tudehope defended his attendance and appearances at Reformers recruitment events during 2018, including "Children versus Radical Gender Ideology" and "Your Religious Freedom".
He suggested his aim at the events was only to engage on social issues.
Mr Tudehope was not a member of the Reformers, but was closely associated with several members through involvement in the party's right-wing faction.
Earlier on Tuesday, retired businessman Frits Mare answered questions over a May 2020 meeting he had with John-Claude Perrottet and Mr Ellis.
Mr Mare recounted during the meeting the men said they needed $50,000 to set up a call centre to recruit "like-minded" people to the party.
Mr Ellis said the aim was to get enough support to vote oust then-federal Mitchell MP and factional centrist Alex Hawke in a process called branch-stacking, according to Mr Mare.
"Ellis said they wanted to get enough people to challenge Alex Hawke in his seat and then vote him out," Mr Mare said.
The former businessman said he found the prospect strange as he believed Mr Hawke was doing a good job.
Mr Mare, who is not accused of any wrongdoing, aired the same claims during a 2023 parliamentary inquiry into alleged branch-stacking.
The commission is investigating allegations the Reformers solicited or accepted money from prohibited donors using sham contracts to assist their factional mission.
A focus of the operation is alleged links between fugitive property developer Jean Nassif, who is wanted over fraud allegations, and Liberal Party members.
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