Members of a conservative Christian Liberal party faction received a “kickback” from consultancy payments made by the governing body for more than 600 schools in New South Wales, an inquiry has heard.

Consultant and lobbyist Jeremy Greenwood gave his third day of evidence to the Independent Commission Against Corruption’s (Icac) Operation Rosny on Wednesday.

He is named in two of Icac’s allegations but has disputed whether he was a member of the factional group, the Reformers.

Icac is investigating whether the group solicited or accepted prohibited donations for the recruitment or renewal of members to the party. The practice, known as branch stacking, is not itself illegal. The Reformers wanted more conservative policies on issues such as same-sex marriage, abortion and euthanasia.

On Wednesday, questioning focused on Catholic Schools NSW, alleged to have made illegal donations to support the Reformers’ branch-stacking efforts under the guise of public affairs and consultancy services, arranged and approved by the CEO, Dallas McInerney.

Greenwood was read emails between him and McInerney in October 2022 in which the latter asked him about missing invoices, to which he responded: “I stopped sending them in the end, haha.”

Counsel assisting, Peggy Dwyer SC, asking why he had signed off the message in that way, said: “Is the joke on parents paying funds to Catholic Schools NSW, or the government assisting with that funding, that this money is not for any genuine consultancy, but was in fact intended in part to fund Jean-Claude Perrottet?”

“Absolutely not,” said Greenwood.

Nearly 80% of funding for Catholic Schools NSW comes from federal and state funding, or around $3.8bn in 2024.

In 2021, the schools governing body moved from making payments to Beckington, a lobbying company controlled by Greenwood and Reformer Christian Ellis, to JPG Advisory, a lobbying firm also controlled by Greenwood. JPG Advisory is still active on the NSW lobbyists register, but was deregistered from the federal list on Monday.

On Wednesday, the inquiry heard that two members of the Reformers, Perrottet and Robert Assaf, received payments from JPG using money from its contract with Catholic Schools NSW. Dwyer described the payments as a “kickback”. Greenwood repeatedly rejected the suggestion that no consulting work was ever done for Catholic Schools NSW by JPG.

The inquiry has heard that Greenwood agreed to pay Perrottet, whom he described as his “best mate”, half of a monthly retainer if he was able to secure the contract with McInerney, while Assaf received a one-off 10% of the retainer.

Greenwood admitted that after the contract was secured, Perrottet did no consulting work for Catholic Schools NSW. Asked if Perrottet had sent “fake invoices” to suggest he had done work under the guise of consultancy, Greenwood said he would have “no issue” with this, because they had agreed to a “commission arrangement”.

“It could say he bought a flamingo off me. It was just an internal document only for me. It’s how I process it out that matters.”

At one point, Greenwood was reprimanded during his evidence after he told someone in the hearing room: “You’ve been through my emails. Don’t give me that look”.

The presiding commissioner, Fabian Gleeson, pausing the hearing, told Greenwood: “You need to be respectful in the way in which you behave, you need to listen to counsel’s questions. You do not direct comments to other people sitting in this room.”

After Greenwood protested, Gleeson asked him if he understood “what is expected of you in terms of respectful conduct and decorum in this room”.

“Yes, commissioner,” Greenwood answered.

Greenwood was asked about WhatsApp messages in which he wrote to Perrottet: “Hey, so you know how I’m good to you and help you and give you all your filthy schools’ money … And put up with your fucking whining?”

Perrottet wrote back: “Don’t put that in writing.” Greenwood replied: “It deletes.”

The inquiry heard that while Perrottet had deleted the messages, Greenwood had not. “I’m not sure how it works to be honest,” he said.

But he rejected the suggestion the messages reflected a “dodgy arrangement” under which Catholic Schools NSW money was being passed on to Perrottet to fund recruitment work for the Liberal Party, saying the messages were a “stupid joke”.

“I’m trying to rile him up about something I know would make him nervous to hear,” he said.

McInerney will appear as a witness on Thursday and Friday. In its first week, the inquiry heard that a screenshot of a message from McInerney, who is a factional ally of federal opposition leader, Angus Taylor, was sent to Reformers members in March 2021. McInerney said he planned to “shake down Angus for 10k”.

Taylor, who has not been named in Icac’s allegations, has repeatedly denied making payments to the Reformers.

Icac’s inquiry continues.