The new deputy leader of the NSW Liberals, Stuart Ayres, says he did not know former premier Gladys Berejiklian and disgraced MP Daryl Maguire were in a relationship and speculation he struck a "sweetheart deal" with them over a funding grant is "fantasy".
The NSW Independent Commission Against Corruption is investigating whether Ms Berejiklian breached the public trust when she supported projects proposed by Mr Maguire, with whom she was in a relationship.
The NSW Jobs Minister told the commission that he believed one of those projects - a multi-million-dollar upgrade to the Wagga Wagga Clay Target Club - "had a lot of merit" when he was minister for sports.
Mr Ayres said he had no idea then-Treasurer Ms Berejiklian and member for Wagga Wagga Mr Maguire were in a secret relationship when the proposal was underway and if he had it may have been a conflict of interest "to be managed".
"I never anticipated or thought or considered that Gladys or Daryl were deriving a private benefit from this project," he said.
Mr Ayres said he found out about the relationship when it was revealed by the commission last year but added that the ministerial code of conduct offered "ways to manage" conflicts of interest.
This evidence echoed that given on Wednesday by former premier Mike Baird who said he was "incredulous" to learn of the relationship, which he said "should have been disclosed".
As treasurer in 2016 Ms Berejiklian controlled the agenda for the expenditure review committee, and on Thursday the commission heard she was perceived as instrumental to the decision to revisit a business case that found the shooting facility proposal didn't pass muster.
In December 2016 Mr Ayres wrote in a memo the "project is legit" after the committee approved the $5.5 million grant conditional on the development of a business case, which the government also funded.
"Why is the government spending $40,000 to work out whether it spends more money for the benefit of a private organisation like the Australian Clay Target Association?" counsel assisting the ICAC Scott Robertson asked on Friday.
Mr Ayres said the government can fund the development of business cases and there was a "question mark" over whether the organisation had the money to fund its own.
A memo raised at hearings earlier in the week shows an advisor to then-premier Mike Baird speculating that Mr Ayres and then-treasurer Ms Berejiklian had done a "sweetheart deal" with Mr Maguire.
"No doubt they've done a sweetheart deal with Daryl, but this goes against all of the principles of sound economic management," Baird's director of strategy Nigel Blunden wrote to his boss.
Mr Ayres said the notion of a deal was "fantasy".
When asked if he spoke directly to Ms Berejiklian about the project Mr Ayres said: "I don't recall having any interactions with her."
Bureaucrats in the NSW Office of Sport were sceptical about the project when Mr Maguire put it forward in 2012 and then again in 2016, dismissing it as "low priority" because it would compete with a state-owned Sydney facility.
As well, there was insufficient detail to back the proposal, former Office of Sport executive director Paul Doorn told ICAC.
But ICAC heard this week that Mr Ayres gave the office a single day to prepare a document he could take to the expenditure review committee to advocate for the project to be funded.
Ms Berejiklian, who denies wrongdoing, stepped down as premier on October 1 when the ICAC announced it would be holding public hearings examining her conduct.
She's slated to appear as a witness on Thursday and Friday next week.
Australian Associated Press