Mike Baird ‘incredulous’ Gladys Berejiklian had secret relationship and says it should have been disclosed, Icac hears

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Former New South Wales premier Mike Baird has told Icac he was “incredulous” his successor, Gladys Berejiklian, had been in a secret relationship with the former Wagga Wagga MP Daryl Maguire and believed it “should have been disclosed”.

Baird appeared as a witness before the Independent Commission Against Corruption on Wednesday and told the hearing he had no idea Berejiklian had been in a “close personal relationship” with Maguire until it was revealed publicly in 2020.

Asked by counsel assisting the inquiry, Scott Robertson, whether the disclosure came as a shock, Baird responded: “I think incredulous.”

Baird told the inquiry he had never seen Berejiklian act in a “partial or biased way in relation to any matters concerning Mr Maguire” but he said she should have disclosed the relationship “in the context of a potential private interest [and] in terms of good practice”.

Related: Icac documents: Mike Baird staffer questioned why Berejiklian wanted to spend $5.5m in ‘safe seat’ of Wagga Wagga

Asked who it should have been disclosed to, Baird replied: “Myself, as premier.” Baird was the premier from 2014 to early 2017.

Icac is conducting two weeks of hearings into whether Berejiklian breached the public’s trust by “exercising public functions” in circumstances where she had a conflict of interest because of her secret relationship with Maguire.

At the heart of the inquiry are two grants: $5.5m given to the Australian Clay Target Association and $30m for the Riverina conservatorium of music, both in Maguire’s electorate of Wagga Wagga in 2017 and 2018.

Earlier on Wednesday, the inquiry heard one of Baird’s chief advisers had written in a briefing that Berejiklian put the proposed $5.5m grant lobbied for by Maguire back on the agenda of the NSW expenditure review committee after “Daryl fired up”.

Icac heard evidence from Nigel Blunden over the multimillion-dollar grant to the clay target association’s shooting range in 2017.

“Sometimes you gotta say WTF,” Blunden wrote at the top of a scathing briefing note about the grant proposal, which he said went “against all our principles of sound economic management”.

The commission heard explosive evidence that in late 2016 Blunden attempted to stop the proposal from being put before the powerful expenditure review committee.

When he first heard the proposal was due to go before the committee on 6 December, Blunden wrote to the chief of staff of the then minister for sport, Stuart Ayres, and a staff member inside Berejiklian’s office asking for it to be delayed.

“News to me seems like a lot of $$$,” Blunden wrote in an email at the time.

“Let’s hold this one until the business case is finalised and do it once.”

Blunden gave evidence he believed the item had been delayed, but days later it again appeared to have been placed back on the committee’s agenda.

Blunden told the inquiry he could not recall how the submission made it back on to the agenda, but in a briefing note on the proposal that he sent to Baird about a week later he wrote: “Daryl fired up and Gladys put it back on.”

He told the commission he could not recall how he knew Maguire had “fired up”, but believed it may have been relayed to him by another adviser.

In the briefing he jokingly referred to the proposed shooting complex as the “Maguire international shooting centre of excellence.”

“As Joel Goodson [Tom Cruise’s character in the 1983 film Risky Business] would say, ‘sometimes you gotta say WTF’,” Blunden wrote at the top of the briefing.

Blunden’s extraordinary briefing to Baird was scathing on the funding proposal, saying its claims about economic benefits were “suss”, and recommending the then premier oppose the grant.

Blunden wrote that both Berejiklian and Ayres “want” the project, and said: “No doubt they’ve done a sweetheart deal with Daryl” but that “this goes against all the principles of sound economic management”.

Blunden said his use of the word “sweetheart” had not meant to suggest wrongdoing, but that it came from a “sense of frustration” that the funding proposal had continued to resurface.

Asked about the ERC meeting on Wednesday, Baird told the commission he could not recall anything unusual occurring. He said although he had shared the concerns expressed by Blunden he was happy to support the project if conditions tied to the grant were met.

But he said if he’d known about Berejikian’s relationship with Maguire that may have changed the way he approached the December meeting.

Baird said he may have asked her to leave the room or not participate in the debate, depending on her “capacity to manage the conflict of interest”. “If it was revealed at the meeting the [then-]treasurer [Berejiklian] should have been excluded,” he said.

After Wednesday’s hearing, Baird told reporters he was “devastated to be here giving evidence” about a “close personal friend”. “I think she has the highest integrity and a real commitment to public service and public life,” he said.

According to documents tendered before the commission on Tuesday afternoon, another staffer, Zacharia Bentley, said Blunden had also questioned why Berejiklian had wanted to spend $5.5m funding a clay target shooting range in the “safe seat” of Wagga Wagga.

On Wednesday Blunden told the commission his main concern at the time had been about the project lacking a “rigorous benefit-cost ratio”, and an independent business case.

Related: Gladys Berejiklian had ‘inclination to support’ $5.5m Wagga shooting complex, Icac hears

“My overwhelming concern was about the urgency of this and I was troubled by the absence of a rigorous [cost-benefit ratio]. We applied the same scrutiny to projects across the state reg of what electorate they were in but it was just [a] case of was this really the most appropriate expenditure of $5.5m of taxpayer money.”

The multimillion-dollar grant is one of two at the centre of an investigation into Berejiklian’s conduct.

The premier resigned this month after Icac announced it was investigating her conduct. She has consistently denied any wrongdoing and has said that history will demonstrate that she acted in the best interests of the people of NSW. She has yet to give evidence in the current hearings.

Blunden told the inquiry he had “absolutely no knowledge” of the relationship before it was raised in the Icac last year, and said if he had known in 2016 he “would have sought advice from somebody, maybe [Department of Premier and Cabinet]” about whether “there may have been a conflict of interest involved”.

Counsel assisting the inquiry, Scott Robertson, asked Blunden about evidence he gave to the Icac in a private investigation in April this year. In that hearing, Blunden told the inquiry if he had known about the relationship he would have viewed approaches by Maguire in a “vastly different way”.

“I’m meant to know these things in my job and I had no idea,” he said in April.

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