The corruption watchdog has found that former University of New England chancellor John Cassidy acted corruptly over the sale of university-owned Tattersalls Hotel to his business partner but has stopped short of recommending criminal charges against him.
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In a report delivered on Thursday, the Independent Commission Against Corruption said Mr Cassidy misused inside information about the sale of the Armidale pub "to gain advantage for Mr Hendry" and failed to disclose his relationship with Mr Hendry to the university.
Mr Cassidy, a former boss of construction giant Abigroup, also misled the university about when he decided to become a partner in the hotel, the ICAC found.
But Commissioner Megan Latham said Mr Cassidy's conduct involved "disciplinary matters rather than criminal offences".
"As Mr Cassidy is no longer chancellor of UNE, it is not necessary for the commission to consider whether any disciplinary action should be taken against him or any other action should be taken with a view to his dismissal," Commissioner Latham said in the report.
During public hearings in July, the ICAC heard allegations that Mr Cassidy passed on confidential information about rival bids that had been made for the hotel to Mr Hendry, his long-time friend and a former financial director of Abigroup.
But the commission said in its report that it was "not satisfied" that he told Mr Hendry this information.
Mr Cassidy had given Mr Hendry a tip-off about the sale of the hotel in a November 2005 phone call, the ICAC found. The commission said this was not itself improper but he had made improper use of confidential information - including a valuation report on the hotel - when he told him it was a "good investment".
The ICAC found the two men had discussed Mr Hendry's bid in a subsequent phone call on December 1. On December 5, Mr Hendry's $2.65 million bid for the hotel was accepted by the university and contracts were exchanged the next day.
"Mr Hendry wanted a partner to invest in the hotel and anticipated that Mr Cassidy would be that partner," the commission said.
"It is logical that he would have wanted to communicate to his potential partner the amount he was proposing to offer for the hotel."
The report noted that some of Mr Cassidy's evidence appeared to be the product of "recent invention" but Mr Hendry's evidence was reliable.
The ICAC said Mr Cassidy had misled the university's audit and compliance committee when he wrote in a letter on February 5, 2006, that the possibility of him investing in the hotel with Mr Hendry was not raised until January 2006.
The evidence was consistent with Mr Cassidy having agreed to invest in the hotel by December 9, the commission said.
No adverse findings were made against Mr Hendry.
