He later whittled that down to the successful offer of $2.65 million, just $150,000 more than the next highest bid.

That winning bid was submitted after Mr Hendry received a phone call “out of the blue” from Mr Cassidy, saying the hotel was “a good investment”, it was claimed before the Independent Commission Against Corruption yesterday. Evidence emerged during the inquiry into allegations Mr Cassidy used his position to gain confidential information regarding the hotel’s sale for the benefit of both himself and Mr Hendry.

The five-day inquiry is hearing evidence from 19 witnesses, including Mr Cassidy and Mr Hendry, before Justice Megan Latham in Sydney.

On Monday, counsel assisting the commission, Anna Mitchelmore, outlined the case against Mr Cassidy, who was described by Mr Hendry as “Rainbow Man”. Mr Hendry described himself as “the dark clouds down the other end” during their business dealings over a near 30-year period. 

It was 2005 and Tattersalls, in Beardy Street Mall, had been put to tender in a bid to rescue Services UNE from a potential financial black hole.

The commission heard how UNE Union operated and managed the hotel.

The threat of voluntary student unionism, and its projected decline in income for the union, forced a rethink by the UNE Council on the union’s assets and ultimately led to a decision to sell Tattersalls by tender.

Gerry Quinlan of Manenti Quinlan was asked to value the hotel, which he did at $2.35 million.

In her evidence, Ms Mitchelmore described Mr Cassidy as a “hands-on” manager.

“Mr Cassidy read a copy of [a report recommending the sale of Tattersalls] ... it will be apparent from the evidence that he read enough of the documents to form the view that the valuation was too low,” Ms Mitchelmore told the inquiry. 

Before the hotel was put to tender on October 31, 2005, Armidale businessman Archie Campbell had offered to buy the hotel for $3 million, although he later revised that offer to $2.5 million.

Mr Cassidy knew of the tender process and how it was proceeding. Ms Mitchelmore claimed sometime before November 16, nine days before the tender’s closing date, Mr Cassidy phoned Mr Hendry  “out of the blue” and suggested  he “take a look at the Tattersalls Hotel”.

Yesterday, Mr Hendry confirmed that the first he knew of the hotel’s sale was when he was contacted by Mr Cassidy.

“I received a telephone call from John who, ah, he basically said ... [sic] ‘You should, you should have a look at that pub ... because he thought it was a good investment,” Mr Hendry told the hearing.

He claimed Mr Cassidy contacted him “sometime in mid-November” but did not discuss any price.

Meanwhile, on November 25 the tenders were opened and showed three formal bids; one for $2.2 million, another for $2.375 million and the final for $2.5 million.

“There was a conditional offer of $3.5 million from Mr Hendry,” Ms Mitchelmore said, although he asked for more time to submit a formal tender.

“Mr Cassidy attended the offices [of those tasked with overseeing the tenders] ... it is alleged Mr Cassidy learnt who had submitted the tenders, including Mr Hendry and the respective amounts,” Ms Mitchelmore claimed.

Mr Hendry was allowed extra time to resubmit his tender and on December 2, 2005 submitted a revised formal tender of $2.65 million for the hotel.

Witnesses to appear before ICAC today include Mr Cassidy’s nephew Shaun Cassidy and former chief executive of Services UNE Sue Paini.

Mr Cassidy has been called to appear before ICAC tomorrow and Friday.

Meanwhile, the redevelopment of Tattersalls Hotel continues.

Parts of the building’s interior have been gutted to make room for a downstairs bistro and an al fresco dining area in the Beardy Street Mall.

Armidale Dumaresq Council passed a development application for a $5 million revamp of the building in 2009.

Those plans included an outdoor eating area, car-parking at the rear and extra accommodation upstairs.