Former Labor minister Ian Macdonald was paid $450,000 to keep "rolling along" until a tainted $500 million coal deal in the NSW Hunter linked to the Obeids was done, a corruption inquiry has heard.
He is alleged to have rigged a tender process for coal mining exploration licences to benefit his former Labor colleague Eddie Obeid, whose family owned land around Mt Penny where a critical coal tenement was created.
On Wednesday, the ICAC was told that Mr Macdonald received $450,000 in "loans" from a company associated with his friend, lawyer John Gerathy.
Mr Watson suggested the money was to keep Mr Macdonald "rolling along" until a $500 million coal deal between Cascade Coal and White Energy went through.
White Energy made a $500 million bid for Cascade, the company that received the exploration licence, before the deal was scrapped.
"At that time you could pay Gerathy back his money and you'd be rolling in clover," Mr Watson suggested.
Mr Macdonald said he wasn't going to "get anything out of any of those things".
The inquiry heard the payments were made to a company associated with Mr Macdonald as a series of $25,000 and $15,000 loans between September 2010 and July 2012.
There was no security for the loans until May 28, 2012, six days after Mr Gerathy was called to produce financial records to ICAC, the inquiry heard.
"It seems a bit fishy doesn't it?" Mr Watson asked.
"It's not fishy," Mr Macdonald replied.
Mr Macdonald said the payments were to help him out with business, not to pay for his personal living expenses.
Earlier, Mr Macdonald said he had no knowledge about notes handwritten by his mate, businessman Greg Jones, which the ICAC alleges indicate the ex MP stood to receive millions of dollars for favours done when he was a minister.
"I'm not aware of what this is about," he said in reference to the notes.
He also denied he had received $30,000 in cash and gifts from Mr Jones, or entities associated with him.
He conceded he had received a wedding present and birthday presents from Mr Jones but said $30,000 seemed "an extraordinary amount".
"I haven't received anything like that," he said.
At one point, Mr Watson labelled Mr Macdonald's evidence a "a load of hooey" after he was shown an atlas he claims to have used to decide where the controversial Mt Penny tenement would be located.
"I'm going to suggest that all this business about you finding it in an atlas, that's a load of hooey; you made it up because you knew you were in trouble," Mr Watson said.
"I disagree with it," Mr Macdonald replied.
The inquiry continues before Commissioner David Ipp on Thursday.