NSW Liberals refund 'tainted' donations

The fallout from NSW's latest corruption inquiry has already begun, with the NSW Liberal Party announcing it will refund over $75,000 of "tainted donations" to Sydney Water.

The Independent Commission Against Corruption's (ICAC) Operation Credo launched public hearings in Sydney on Monday, with allegations that Australian Water Holdings donated tens of thousands of dollars to the Liberals.

The private company, which has strong links to the family of former Labor powerbroker Eddie Obeid, is alleged to have entered a business deal with Sydney Water and incorrectly invoiced it for tens of thousands of dollars for "administration costs".

Under the guidance of Australian Water Holdings CEO and Liberal Party fundraiser Nicholas Di Girolamo some of that money is alleged to have been donated to the Liberals.

Following the revelations, the NSW Liberal Party announced it had cancelled donations from Australian Water Holdings and will refund $75,636 to Sydney Water.

"The Liberal Party of Australia (NSW Division) acts with the highest standards of integrity at all times," the party's acting state director Simon McInnes added.

"The return of these tainted donations to Sydney Water is the right thing to do."