It was meant to be the site of Mr Baldwin's family home, a leafy hilltop block with sweeping views of Port Stephens zoned for environmental protection.

But a protracted dispute involving claims of illegal clearing and unauthorised earthworks saw the Liberal MP and then Port Stephens councillor slapped with an order in 2004 to rectify damage reportedly worth up to $250,000 to a neighbouring block.

Mr Baldwin never built his house, with documents obtained by the Newcastle Herald revealing he sold the land to Mr Williams' wife, Fiona, for $750,000 - the most the block has ever fetched - on March 20, 2007.

Searches on several property databases did not indicate an agent was used in the sale.

Ten months later, after the global financial crisis hit that saw some property prices fall in the coastal town, Mrs Williams put the land back on the market with Robinson Property for $715,000.

She sold it two months later for a $50,000 loss, not including the agent's fees.

The value of the land has continued to plummet and it was last sold in October 2012 for $580,000.

"Mr Baldwin said the property was sold on the "open market for market price" after he "considered a number of bids".

"My solicitor then helped me proceed the sale," he said.

The long-term relationship between Mr Baldwin and Buildev was thrust into the spotlight this week by the Independent Commission Against Corruption after it revealed a letter written by the federal MP to "implore" the NSW Coalition government to support Nathan Tinkler's proposed coal-loader.

Mr Williams and Buildev are at the centre of the corruption inquiry into political favours.

Dated April 2011, Mr Baldwin's letter was tendered at the ICAC when a witness told the inquiry that Buildev, part owned by Nathan Tinkler and behind the loader pitch, gained the "ear" of Mr Baldwin following donations to his campaigns.

The letter was addressed to the new resources minister, Chris Hartcher, and the minister for police, Mike Gallacher, who are both at the centre of the inquiry. It was also sent to ports minister Duncan Gay.

It urged the NSW government to give it "immediate" in-principle support and "provide an approval process free of red tape".

Mr Baldwin also sent a copy of the letter as "FYI" to Buildev director David Sharpe, who replied: "Thanks Bob letter looks good".

Developers were banned from donating to NSW political parties and candidates in late 2009, but are still permitted to give money for federal campaigns.

Mr Baldwin said he had not been contacted by the ICAC and declined to answer questions about his relationship with Buildev and Mr Williams.

"While ICAC is continuing its investigations, I won't be making further comment," he said.

Mr Baldwin and his wife Cynthia bought the Nelson Bay block in 1999 for $250,000 and lodged numerous development applications for a large two-storey home.

Then fellow Port Stephens councillor and now Port Stephens MP Craig Baumann part-owned the company that was to build the house.

Mr Baldwin has always denied any wrongdoing and said a contractor cleared the trees unbeknown to him.

Documents obtained by the Herald at the time under freedom of information revealed advice from council's lawyers that not prosecuting Cr Baldwin could be seen as "going soft" because the council had, on previous occasions, "commenced proceedings against landowners for similar breaches".

Internal council reports indicated that the excavations, which involved a cut up to four metres deep into the side of a hill, destabilised part of a neighbouring property and caused "substantial damage" to sewer mains.

A senior council staff member described the site as being "modified to an inappropriate degree".

Mr Baldwin repaired the damage to the sewer and installed a large concrete retaining wall, that runs the length of the block, to stabilise the neighbouring property.

Neighbours described the ordeal as a "nightmare" and said they were extremely relieved when Mr Baldwin sold the property.

Mr Williams did not respond to requests for comment.

Newcastle Herald