Mr Murphy, who runs a Newcastle carpet business and is chairman of the influential business lobby group the Newcastle Alliance, has declined to comment publicly about several mentions of his name at the ICAC’s public hearings into payments for political favours.

Text messages shown at the commission earlier this month revealed Buildev director Darren Williams asking an unknown person about ‘‘the carpet man’’ two days before the last state election.

‘‘Mate can I talk to Troy to sort out the carpet man today please?’’ Mr Williams texted on March 24, 2011.

When asked at the ICAC who he was referring to, Mr Williams said the ‘‘carpet man’’ was ‘‘Paul Murphy’’ who ran the ‘‘Newcastle Alliance’’.

‘‘To the extent that there’s any references made by you to the carpet man or payments to the carpet man, what was he doing, tiling?’’ counsel assisting the inquiry Geoffrey Watson, SC, asked.

‘‘Ah, no,’’ replied Mr Williams. ‘‘Paul Murphy ran the, I think it was called the Newcastle Alliance.’’

Mr Williams has admitted at the ICAC that he was involved in a secret campaign to oust former Labor minister Jodi McKay from the seat of Newcastle at the last state election because she opposed his boss, former billionaire Mr Tinkler’s coal-loader plan. The Newcastle Herald can reveal that before the poll, the Newcastle Alliance – run by high-profile Hunter business people and professionals – registered as a third-party campaigner with the Election Funding Authority in order to run a political advertising campaign.

Third-party campaigners are organisations or people who spend more than $2000 attempting to influence voting at an election and must submit a funding disclosure with the Election Funding Authority.

Property developers and businesses in the tobacco, liquor and gambling industries are banned from donating.

The alliance’s print and radio advertising campaign, known as Fed Up, ran from March 17 to 25 and urged people in the traditional Labor stronghold to ‘‘change the way we vote’’ and ‘‘make politicians treat the Hunter with respect’’.

The anti-Labor blitz cost $61,056 but Mr Murphy has repeatedly refused to say where the money came from and the group declared no donations to the electoral authority.

An article on the New Matilda website two days before the election described the advertising as a ‘‘privately funded media campaign in a bid to topple the NSW Labor MP [Ms McKay] at this weekend’s state election’’.

The ads did not endorse either of Ms McKay’s opponents, John Tate or Tim Owen, but called on voters to consider shifting away from Labor to make Newcastle a marginal seat.

At the time, the ABC reported that ‘‘Mr Murphy refused to be drawn’’ on where the money came from and New Matilda quoted him as saying: ‘‘It’s my business, it is not your business.’’

‘‘He said it was a private matter for the alliance board, who are the only members of the organisation,’’ New Matilda reported. ‘‘He said it was up to the board what promotional activities they undertook and that there were no big developers involved.’’

The Herald contacted all current board members and the majority said they had no idea where the money came from.

Former alliance board member and prominent hotelier Rolly de With said he resigned from the group earlier this year but was unable to comment further as ‘‘this is the subject of inquiry by the commission’’.

Board member and local lobbyist Chris Ford said he was unsure exactly who donated to the campaign, but he had not.

‘‘There were businesses who kicked the tin, but you would have to ask Paul [Murphy] as he is the chairman,’’ he said.

Board member and lawyer Nick Dan said he never asked exactly where the money came from but assumed there were some donations.

Fellow board members Tracy McKelligott, of Eclipse Media, Kristen Keegan, of the Hunter Business Chamber, Colin Scott, of Frontline Hobbies, and Ben Chard, a retired senior NSW public servant, all said they did not donate and did not know how the campaign was funded.

‘‘I would have vetoed any plan if I thought it did not comply,’’ Mr Chard said. ‘‘The nature of the campaign in my mind was to get people to think about their vote and think about growth for Newcastle.’’

Mr Scott said he did not believe the alliance had $60,000 in its bank account at the time.

‘‘I had no idea those sorts of numbers were around,’’ he said. ‘‘There was always money in the kitty but not to that level as far as I was aware.’’

The alliance previously operated as a council contractor providing business services but when it lost the contract in 2007, it was reborn as an advocacy group to push for the revitalisation of the inner city.

Property Council Hunter director Andrew Fletcher and Tourism Hunter chair Will Creedon joined the alliance board after the campaign.

Marketown centre manager and alliance board member Christine Gregson did not respond to numerous requests for comment.

Last week, at the ICAC, text messages between Mr Williams and Mr Tinkler referred to ‘‘carpet’’ in a plan targeting Ms McKay, but it has not yet been disclosed at the inquiry what, if any, link there is between the ‘‘carpet’’ reference and the ‘‘carpet man’’ references.

 FORMER NSW minister Chris Hartcher and his former staffer Tim Koelma spoke in code about companies that secretly funnelled nearly $400,000 to NSW Liberals, the corruption watchdog has heard.

The Independent Commission Against Corruption is investigating allegations Mr Koelma’s company EightByFive was a sham outfit, set up to allow banned political donors to secretly fund the 2011 election campaigns of NSW Liberal MPs.

Mr Koelma, it’s alleged, would then create phoney invoices so donors’ payments could be passed off as payments for media relations and strategic advice.

‘‘Mr Hartcher was the mastermind of this. It was his idea to set up this business EightByFive which could then produce fake invoices and collect money on behalf of the Liberal Party,’’ counsel assisting Geoffrey Watson SC said yesterday.

‘‘Absolutely not,’’ Mr Koelma replied from the witness box.

In a 2010 email obtained by ICAC, Mr Koelma updated Mr Hartcher on the status of his ‘‘Friends’’: ‘‘Sydney – steady, meeting them next week. West – steady, discussing correspondence on Monday. North – nothing yet.’’

He has told the inquiry these were his clients – property developer Gazcorp in Sydney, infrastructure firm Australian Water Holdings in the city’s west, and Nathan Tinkler’s Buildev up north in Newcastle – and he was keeping Mr Hartcher in the loop because he thought he would be interested.

But Mr Watson said Mr Koelma was updating his boss on money flowing in from the three companies and  a ‘‘code’’ was used to disguise contact between the parties.

‘‘I don’t think it was a code, I think it was just a colloquialism,’’ Mr Koelma said.

Earlier yesterday Mr Watson repeatedly asked if Mr Koelma wanted to withdraw or retract any of his evidence so far.

‘‘If you relent now and tell the truth people might go easy on you,’’ Mr Watson said.

‘‘I’m not sure what you’re driving at,’’ Mr Koelma said.

‘‘Well, at lunch you can take a cab out to Malabar and see exactly what I’m driving at,’’ Mr Watson retorted.

Malabar, in Sydney’s east, is home to Long Bay prison.

Anyone found to have deliberately misled the commission can be jailed for up to five years.  AAP