Instead, Ian Macdonald held “very robust debates” with highly experienced advisors advocating that companies associated with Labor powerbroker Eddie Obeid be allowed to tender for the lease, according to evidence tendered to the Independent Commission Against Corruption.

In May 2008, Macdonald asked a small group of junior mining companies to bid for the Mt Penny exploration lease. These included Monaro Coal, which was linked to Obeid and formerly involved with uranium mining in the former Soviet Union.

Internal dissent ultimately ruled Monaro Coal out, but Macdonald reopened the tender to another company associated with Obeid – Cascade Coal.

This company ultimately won the permit, ensuring a windfall to Obeid.

Macdonald's barrister, Tim Hale SC, reportedly suggested Macdonald was concerned smaller miners were having difficulty obtaining NSW coal exploration permits and the government had experienced a "xenophobic" backlash among farmers after awarding the Watermark coal licence to Chinese firm Shenhua, according to The Australian.

Last week, former NSW premier Maurice Iemma told ICAC that Macdonald deviated from the normal protocols in granting a coal exploration licence for the Cascade Coal project.

Iemma said granting of the licence was a “significant departure from normal practice”

He said Macdonald would have been expected to consult the cabinet or the caucus before making a decision that was worth tens of millions of dollars to the state.

ICAC launched the investigation – one of three in progress over former Labor government decisions – to establish whether Macdonald gave inside information about areas that would be opened for coal mining to interested parties associated with Obeid.