"That is a very upsetting statement, sir," replied Mr Kinghorn to Geoffrey Watson, SC, counsel assisting the Independent Commission Against Corruption, which is inquiring into whether Cascade Coal – which was owned by Mr Kinghorn and six other businessmen – was corruptly awarded a coal exploration licence in 2009 by the then mining minister Ian Macdonald.

The family of controversial Labor MP Eddie Obeid and their associates bought up key farms in the Mount Penny area in advance of the Mr Macdonald announcing that the area would be part of a coal tender, the inquiry has been told.

A combative Mr Kinghorn accused Mr Watson of fabricating allegations at the inquiry and threatened to report him to the Law Society. Mr Kinghorn reacted angrily to suggestions that he had helped his friend Greg Jones hide his shares in Cascade Coal because it would be damaging if it was known that Mr Jones, one of Mr Macdonald's closest friends, had an interest in the very company the minister had awarded a coal licence to.

Mr Kinghorn, who founded RAMS home loans, admitted knowing that the Obeid family had secured a 25 per cent stake in Cascade Coal but said that he had no duty to disclose the Obeids' involvement to shareholders of White Energy.

Mr Kinghorn was one of five directors of White Energy who were also investors in Cascade Coal when White Energy offered to buy Cascade for $500 million in late 2010.

Mr Kinghorn has been played a number of intercepted phone calls in which he was heard belittling Graham Cubbin, an independent director of White Energy who was trying to get to the bottom of whether the Obeids were involved in Cascade Coal.

In an intercepted call to Mr Jones, recorded in April last year, Mr Kinghorn was heard saying about Mr Cubbin: "We just got to get there first ... then we'll chop the arsehole's head off."

Mining magnate Travers Duncan has previously told the ICAC that in 2010, when he was informed the Obeids had a 25 per cent shareholding in Cascade Coal, Mr Duncan wanted them out.

Mr Kinghorn agreed today that his reference in one call to the "smell" of the deal, referred to the Obeids' exit from Cascade.

"Think of them [the Obeids] as a dead cat. The dead cat's gone but the smell is still around," Mr Kinghorn told the inquiry.