Shepherd quizzed about Lib slush fund

A Labor senator has suggested the man who headed the Abbott government's commission of audit inadvertently made a donation to a Liberal Party slush fund.

Tony Shepherd, then head of corporate giant Transfield, made a $1500 donation to the Free Enterprise Foundation in December 2010.

Labor has accused the NSW Liberal Party of using the "associated entity" to bypass laws banning donations by property developers.

Election funding records show the foundation donated $693,000 to the NSW Liberals before the 2011 state election.

Labor senator Sam Dastyari used a parliamentary inquiry in Canberra on Friday to quiz Mr Shepherd about the donation and his knowledge of the foundation.

Mr Shepherd told the hearing he "vaguely" remembered making the donation, but thought it was going to the federal Liberal Party.

Senator Dastyari insisted he was not accusing the businessman or Transfield of doing anything untoward, but suggested both might have been drawn unintentionally into a slush fund scandal being investigated by the NSW Independent Commission Against Corruption (ICAC).

Mr Shepherd rejected suggestions Transfield was a property developer.