Federal Liberals are rallying around Assistant Treasurer Arthur Sinodinos, describing him as a man of the “highest integrity” following allegations that he stood to make $20 million as a director of Australian Water Holdings if a New South Wales government decision went his way. 

Senator Sinodinos, the federal Assistant Treasurer, has been dragged into a NSW Independent Commission Against Corruption (ICAC) inquiry into a huge business deal involving former state Labor powerbroker Eddie Obeid.

The inquiry has heard Senator Sinodinos stood to gain tens of millions of dollars if the deal between the privately-held business and state-owned Sydney Water went through.

The minister, who is due to appear before ICAC as a witness at a later date, has consistently denied any wrongdoing.

“He is a terrific person, a person of the highest integrity and these issues will be resolved,” government frontbencher Josh Frydenberg told reporters in Canberra on Tuesday.

Mr Frydenberg says Senator Sinodinos is a valued member of the coalition government.

“I look forward to working with him for many, many years to come,” Mr Frydenberg said.

“I have no doubt he will be in cabinet in due course.”

Finance Minister Mathias Cormann rejected suggestions Senator Sinodinos should stand down.

“Arthur Sinodinos is doing an outstanding job,” Senator Cormann told ABC radio.

He pointed out Senator Sinodinos gave a statement to the Senate about his links to Australian Water Holdings.

“I’m not going to give a running commentary on the inquiry that is taking place,” he said.

Labor frontbencher Anthony Albanese said Senator Sinodinos was entitled to a presumption of innocence.

“These are serious matters,” he told reporters in Canberra.

He said it was a matter for Senator Sinodinos to consider his future in the ministry.

But Labor backbencher Kelvin Thomson said Senator Sinodinos should leave the government’s front bench.

“I think it would be in the best interests for the integrity of the system if Senator Sinodinos were to step aside,” he said.

“If he doesn’t, Tony Abbott should require him to do that.”

Senior Labor MP Brendan O’Connor said while it was incumbent upon Senator Sinodinos to fully cooperate with ICAC, it was up to Prime Minister Tony Abbott to decide whether he should stay on the frontbench.

Parliamentary secretary to the treasurer, Steve Ciobo, said he believed Senator Sinodinos would be cleared of any wrongdoing.

“We’ve got a bunch of half-cocked Labor people going out there trying to attempt to sully his name,” Mr Ciobo told Sky News.

He played down Senator Sinodinos’ past links to a company connected to the Obeid family.

“I’m always very sceptical about people that apply forensic hindsight,” Mr Ciobo said, adding that no allegations have been made against the senator.