Kaila Murnain breaks down giving evidence to corruption inquiry

NSW Labor leader Jodi McKay says she has made the right decision to suspend the state head office boss.

Kaila Murnain leaves The NSW Independent Commission Against Corruption (ICAC) hearing yesterday. Picture: AAP.

NSW Labor leader Jodi McKay says she has made the right decision to suspend state head office boss Kaila Murnain, but added that her “heart goes out to her” after her tearful testimony.

Ms McKay confirmed “Kaila will not stay in this role” and discussions would begin in “next couple of days” over who would replace her as General Secretary.

“She is a broken person., Ms McKay said. “She is 32 years old and her entire career has come grinding to a halt in the worst possible way.”

“I don’t think her position is tenable at all but this is the advice from the solicitors (to suspend her),” Ms McKay said.

“She’s 32 years old ... she’s been General Secretary for five years.

“My heart goes out to her .. she has made a serious error of judgement.”

She said party governance arrangements would be changed after the ICAC inquiry.

Ms Murnain broke down during evidence to a corruption inquiry today, after saying she agreed to cover up a donations scandal because she was “scared”.

A tearful Ms Murnain said today she was following legal advice “religiously” when she kept quiet about Chinese property developer Huang Xiangmo allegedly making an illegal donation to the NSW ALP.

She also admitted in evidence to the NSW Commission Against Corruption that she misled the state’s Electoral Commission in a December 2016 letter that said party official Kenrick Cheah - and not Mr Huang - had brought a $100,000 cash donation into the NSW Labor headquarters.

MORE: Labor suspends party boss over donation silence

Ms Murnain said in evidence yesterday that she remained silent in September 2016 after NSW Labor MP Ernest Wong told her that Mr Huang was the source of a large donation that had been declared in another person’s name a year earlier.

She further alleged that she kept quiet because the NSW Labor Party’s lawyer, Holding Redlich national managing partner Ian Robertson, told her “don’t tell anyone about it” when they met in his office shortly after she received the information about a possibly illegal donation from Mr Huang.

Ms Murnain claimed today she followed the advice from Mr Robertson religiously because she was scared for the NSW Labor Party after it had experienced a difficult period with by-elections and internal upheaval.

Ms Murnain said she sought advice from Mr Robertson after then senator Sam Dastyari told her to see a lawyer about the information she had received from Mr Wong.

Sam Dastyari arrives at the ICAC hearing in Sydney on a hired pushbike. Picture: John Grainger.

It was illegal - and remains so - for property developers to donate to NSW political parties.

NSW Labor’s parliamentary leader Jodi McKay directed party officials to meet urgently and suspend Ms Murnain yesterday just hours after her admission about a donation cover-up. Ms McKay said she had lost confidence in Ms Murnain and was taking steps to clean up a “mess” in the NSW Labor Party.

Mr Robertson has made no comment so far about his alleged role in telling Ms Murnain to keep quiet in September 2016.

Mr Dastyari is expected to give evidence later today.