Former NSW state energy minister Chris Hartcher allegedly used a Central Coast law firm, Hartcher Reid, and his own nephew to unwittingly launder $4000 in donations.
The donation was amongst hundreds of thousands of dollars corruptly solicited by Hartcher and other Liberal MPs.
Geoffrey Watson, SC, told ICAC that investigators had uncovered evidence of the "systematic subversion of the electoral funding laws of NSW".
Since 2009, developers have been prohibited from donating to political parties.
The first day of the ICAC inquiry into allegations concerning the soliciting, receiving and concealing of payments by members of parliament, has revealed that a state minister used a law firm to launder illegal political donations.