Eddie Obeid and his wife have "plainly" been funding their lifestyle with "millions and millions of dollars" from a controversial coal deal in the NSW Upper Hunter, the state's corruption watchdog has heard.

The Independent Commission Against Corruption (ICAC) is examining the 2008 opening up of coal mining in the Bylong Valley by former Labor minister Ian Macdonald.

ICAC claims the now disgraced former minister rorted a bid process for coal exploration licences in the coal rich valley to benefit former Labor powerbroker Eddie Obeid.

Commissioner David Ipp said on Wednesday that in ICAC's view Eddie Obeid and his wife Judith funded their lifestyle from proceeds flowing from the critical Mount Penny tenement.

"It's quite plain from the accounts that Mr and Mrs Obeid fund their lifestyle from loans made through the Obeid companies," Commissioner Ipp told Eddie Obeid's lawyer, David Williams SC.

"They are able to do that through monies coming in from Mount Penny, millions and millions of dollars.

"The benefit of the monies is real to them."

The Obeids have received $30 million from a coal mining venture in the Bylong Valley, and are still owed another $30 million, the ICAC has previously been told.

It has also been told that money from Mount Penny has been put towards a Mercedes-Benz car for Eddie Obeid, and to buy property in Sydney for his wife Judith.

Mr Williams spent much of the day casting doubt on the "money trail" allegedly linking funds from Mount Penny to the Obeid family.

At one point, Mr Williams queried ICAC forensic accountant Grant Lockley over an amount of $166,000 said to have flowed from Mount Penny into Obeid accounts.

"You can't swear on your oath that the $166,000 came from Mount Penny money, can you?" Mr Williams put to the witness.

He went on to label the "whole process" of tracing money from Mount Penny to the Obeids as "illegitimate" and "conceptually inappropriate".

Mr Lockley was earlier this week forced to deny accusations of bias, noting that he's "only interested in the money trail".

ICAC also heard on Wednesday that "adverse findings" by the commission might be recommended against a business associate of Mr Macdonald, John Gerathy, relating to him trying to retrieve a legal file linked to the inquiry.

"I think there is a possibility I will be putting a submission that adverse findings be made against Mr Gerathy related to the Tianda file," counsel assisting the commissioner, Geoffrey Watson SC, said.

Mr Gerathy was this week excused from giving evidence to ICAC for a second time on the grounds that he's suffering from a mental illness.

The inquiry continues on Thursday.