Knives out: questions remain after Dominic Perrottet’s Nazi uniform admission

It's the biggest mystery in New South Wales politics: who was behind the rumours of a damaging photograph of Dominic Perrottet that began circulating in the weeks before he revealed that he wore a Nazi uniform at his 21st birthday party?

When it comes to uncovering the culprit, one Liberal party source said: "It's a bit like that movie Knives Out - there are about 20 people who it could've been and they all had a motive."

A series of bitter preselection fights, bloodletting on the Liberal party's state executive and long-held factional grudges have all been cited as the potential spark behind the shock admission, which has seriously undermined the Coalition government's bid for a fourth term at the upcoming state election.

"Dom's set a lot of people on fire lately and they all have nothing to lose," the same source said. "It's no huge surprise."

The now-infamous birthday party - at Perrottet's old family home in West Pennant Hills - was a "fairly raucous" affair in the downstairs double garage, according to one person who attended, while a second thought it was "pretty tame", at least compared with "the parties [Perrottet's brother] Charlie used to throw".

Nonetheless, a host of future Liberal insiders were there. Alex Hawke, now a federal MP, came dressed in an army uniform, sources told the Guardian, while Nathaniel Smith, the current Wollondilly state MP, came as a pilot. Neither replied to requests for comment.

There were other future party figures there, including at least one who would later help Perrottet secure his spot in Macquarie Street.

At his emotional press conference on Thursday, Perrottet admitted there had been a "discussion" on the night with Jewish friends about his outfit.

He couldn't remember if he apologised at the time, but said he had "no sense" of "the gravity of what I had done" until his parents reprimanded him the next day.

One person who was at the party remembers the conversation taking place. "They asked what the hell [Perrottet was] doing and Dom offered to take it off but they sort of said, 'well you've worn it now'," the person said.

"I don't want to overplay it, it wasn't a big kerfuffle, but I do remember that little conversation."

His regret over that night, Perrottet said this week, has caused him significant anguish over the past two decades, but it was only after a call from his retiring transport minister, David Elliott, on Tuesday night that he decided to come clean.

Despite a series of run-ins between the two men, the call was not a threat, Perrottet has insisted. Instead, it was a warning about rumours, which had been circulating around Macquarie Street for weeks, of a damaging photo of Perrottet.

Whether a photo actually exists is still unclear. But, as the Guardian reported this week, what is certain is that the seed for the rumour came from within the rightwing faction to which Perrottet belongs.

"They have been a powder keg for months," one MP from the rival moderate faction said.

The anger is multifaceted and complicated, but began building when delays to local preselections sparked fears among rightwingers of an attempt to install captain's picks in some seats - essentially a repeat of the events that turned preselections toxic in the lead-up to the federal election.

Then in early December Noel McCoy was dumped as the party candidate in Castle Hill over criticisms he'd made of the Berejiklian government's "damaging" Covid-19 lockdown measures and vaccination mandates. McCoy - Perrottet's close friend, whom he thanked in his first speech in parliament - was furious about the decision.

"Apparently good-faith public policy discussions in defence of core Liberal values are no longer allowed in the Liberal party," McCoy told the ABC at the time.

Other events in mid-December also set off a series of recriminations, often aimed at the premier.

In the days leading up to Christmas Perrottet and other senior MPs, including the treasurer, Matt Kean, hatched a plan to replace three sitting upper house MPs - Lou Amato, Matthew Mason-Cox and Shayne Mallard - with female candidates. That move faced significant pushback from members of the state executive.

The first mention of the so-called "damaging" photograph was made on 2 January by an anonymous Twitter account trading in Liberal party gossip. The account - which has quickly become popular among NSW political journalists - began tweeting on 18 December.

Two days earlier, on 16 December, the NSW Liberal party expelled six senior members of the party - including current and former members of its state executive - after an investigation into allegations of branch stacking. A seventh party member, Kyle Kutasi - who was also a member of the state executive and the right faction, and whom Perrottet also thanked in his inaugural speech - was expelled from the party a day later in relation to a separate incident.

The Guardian does not suggest those seven members are behind the account or the rumours about Perrottet, only that their expulsion caused significant anger among some right faction members.

Ahead of the election, Labor and the Greens are seizing on the controversy.

"This is a government that seems to be intent on destroying itself," the deputy Labor leader, Prue Car, said on Friday.

The Greens' anti-racism spokesperson, Jenny Leong, said the outfit was worn just a couple of years before Perrottet became the president of the NSW Young Liberals.

"It is difficult to fathom his political views were not already formed," she said.

"People living every day with racism can't simply shake it away with a quick press conference, like this government tried to do."