NSW Labor has forfeited a $100,000 donation after an anti-corruption inquiry heard "alternative facts and nonsense" had been put forward in an attempt to hide the true source of the money.
The lawyer representing the party at the Independent Commission Against Corruption inquiry on Wednesday said NSW Labor forfeited the donation on September 13 following evidence given to the ICAC.
"It is apparent that the party cannot be satisfied upon any view at all that the persons who it is alleged made the donation at the dinner on March 12, 2015, were the true donors," Arthur Moses SC told the inquiry.
The ICAC is examining whether Chinese billionaire Huang Xiangmo, who is now banned from Australia, was the actual source of $100,000 said to be donated to Labor by 12 people at the 2015 Chinese Friends of Labor dinner.
Mr Huang, a property developer, was prohibited by law from making donations to NSW political parties.
Mr Moses told the ICAC on Wednesday it appeared there had been an "offence or offences" relating to a scheme to circumvent the donation prohibitions or restrictions under political donation laws.
"There have been a lot of ... alternative facts and nonsense put forward in this inquiry in order to hide the true source of donations," Mr Moses said.
"The ALP accepts that this is a matter that should not have been allowed to get to this stage."
He said the funds have been sent to the NSW Electoral Commission along with amended donation disclosure forms.
The $100,000 will now go to NSW Treasury Consolidated Fund, which contains all money collected, received or held on behalf of the state.
The donation has led to the downfall of Labor's now-suspended NSW party boss Kaila Murnain, who revealed to the ICAC she knew about it for nearly three years.
Ms Murnain previously told the inquiry she was advised by one of the party's lawyers, Ian Robertson, not to tell anyone about it and to "forget the conversation happened".
Under cross-examination by Ms Murnain's lawyer on Wednesday, Mr Robertson again denied giving that advice to the former party general secretary.
"It's unprofessional. It's unlawful," he said.
"I would never advise a client to behave in an unlawful manner."
The senior partner at Holding Redlich told the ICAC that Ms Murnain was a "very seasoned and experienced political operator".
"You don't need legal advice to know what to do about fake donations," he said.
NSW Premier Gladys Berejiklian on Wednesday said she has been shocked by the evidence uncovered in the ICAC and announced a ban on cash donations above $100.
The inquiry continues.
Australian Associated Press