Notes written by Macdonald associate Greg Jones were tendered to the Independent Commission Against Corruption inquiry in Sydney yesterday that allegedly set out the terms of the deal.

The handwritten notes read: “Cascade Coal – Mount Penny – 5% – $4 million approx by June 2010”

The alleged deal between Macdonald and Jones meant the then-minister would get a cut of proceeds from the proposed sale of Cascade Coal, which was linked to Labor powerbroker Eddie Obeid’s family, to a related company for $500 million.

Counsel assisting the inquiry Geoffrey Watson SC told the inquiry the notes showed Jones intended to give $4 million from the mining deal to Macdonald.

''It was his cut,'' Watson alleged.

Jones denied the allegation.

The Cascade sale was abandoned in April 2011 because questions were being asked about a payment that had secretly been made by Cascade to the Obeid family, the inquiry heard.

Jones said he discussed the Obeid payment with Macdonald from September 2008 to December 2009 and he said Macdonald was aware at that time of the Obeids’ links to the company.

Macdonald granted a mining exploration licence to Cascade Coal over land owned by the Obeid family and its associates at Mt Penny in 2009.

He allegedly gave inside information to the Obeids about the areas in the Bylong Valley that would be opened to coal exploration.

Macdonald is due to front the inquiry next week.