The mayor of North Sydney took a potentially illegal donation from a pub baron which she says was for tickets in a raffle of one of her paintings.
A copy of a bank statement in her name, obtained by Fairfax, shows Jilly Gibson was sent $999 by Peter Calligeros - who owns three North Sydney pubs - weeks before the 2012 council election that brought her to power.
That's $1 shy of the threshold at which donations must be individually reported. But all donations from people who profit from the sale of alcohol are prohibited.
The mayor did not declare any conflict when later considering policies affecting Mr Calligeros' business interests.
Cr Gibson came to attention this year when she applied for a restraining order against a fellow councillor. That matter is working its way through the courts.
Mr Calligeros initially said he could not recall sending the mayor money but then said he had made an "unintended charitable donation" that had been refunded.
"I thought I was buying raffle tickets [for paintings] because she's a bit of an artist," he said. "As soon as I realised it might have been used for donations, I wanted it back."
Mr Calligeros said he could not remember who sold him the tickets and qualified previous statements to say he was no longer certain how the money came to be returned. It took almost a year - less than two months before the first deadline for election returns - for the money to be returned.
Cr Gibson said she was unaware of the donation until just before filing her campaign returns, when she sacked her campaign's ''official agent'' who she claims had not alerted her. ''The raffle was cancelled [due to lack of interest],'' she said.
Another $990 - also labelled raffle tickets - was deposited into the mayor's account a week later. No raffle on that date is listed in her election returns and it is not known who sent the money. "I don't have to tell you anything," she said.
Cr Gibson said she was unaware of any potential conflict of interest when proposing the council turn off parking meters after-hours for two years on about 10 stretches of street in the centre of North Sydney, an area encompassing Mr Calligeros' pubs. The proposal was later rejected after its cost was estimated at $300,000. "I stand by my initiative [which] would have been right across the CBD," she said.
Despite winning the election, Cr Gibson lacks a majority on council. She said another candidate with whom she had a falling out, Maryann Beregi, was responsible for fund-raising. Cr Beregi says she did not meet Mr Calligeros and was unaware of any raffle.
Cr Gibson said the Election Funding Authority had cleared her repayment of the donation and raised no problems with her returns.