Sources have told Fairfax Media that during his sponsorship of Manly, which finished several years ago, Mr Melhem had allegedly been supplying cocaine and prostitutes to some players as well as making cash payments to some in breach of salary cap regulations. On several occasions at private parties hosted by Mr Melhem he allegedly provided cocaine to some players.

Just after 9am on Thursday, the former mobile phone entrepreneur and property developer was nabbed after he allegedly sold cocaine to an undercover police officer at Sydney Olympic Park. By day's end detectives from the Middle Eastern Organised Crime Squad (MEOCS) had seized 22kg of cocaine from an apartment Mr Melhem's syndicate rented for $830 per week in Refinery Drive, Pyrmont. Earlier in the week, as part of the same investigation, police also allegedly seized 3kg of cocaine and 5kg of ephedrine.

During other searches, police seized more than $100,000 cash, two motor vehicles, methylamphetamine, laptops, mobile phones, electronic devices and clothing.

Only last week surveillance officers watched Mr Melhem, 43, allegedly putting a large amount of pseudoephedrine in the boot of a car for someone else to pick up. Also arrested was Christian Wickramasinghe, 40, who has previously served time in jail in New Zealand over the importation of heroin worth almost $30 million.

Police began investigating Mr Melhem in April and allege that he was running the syndicate through encrypted messages sent between BlackBerry phones.

Michael McCarry, a cocaine addict on the dole, was allegedly employed as a courier yet never met Mr Melhem, according to an agreed statement of facts tendered in Newtown Local Court on Friday. The father-of-three from Annandale was allegedly paid between $500 to $2000 per delivery.

Surveillance officers watched on as, on August 15, he drove to a food shop in Mascot and transported a cardboard box from one car boot to another containing 2kg of cocaine.

On Friday, his lawyer argued that Mr McCarry, 46, didn't know what the two white bricks with Red Bull insignia inside the box were.

Magistrate Margaret Quinn denied Mr McCarry bail, saying the Crown case was too strong.

She said it was an "unattractive fact" that Mr McCarry was collecting the dole and a carer's payment to look after his mother and uncle while also seemingly earning up to $2000 per delivery. Mr Melhem's arrest marks a stunning fall from grace for the entrepreneur who was once a major sponsor of the Sea Eagles and at one stage a prospective buyer. It was at Mr Melhem's harbourside mansion in Kirribilli in September 2010 that the family, teammates and supporters of Brett Stewart gathered to celebrate the Manly star's acquittal of sexually assaulting a teenage girl.

In retirement, former Manly captain Ben Kennedy and Mr Melhem went into a property development venture on the outskirts of Cairns and, in more recent years, Mr Melhem offered to help Anthony Watmough with business opportunities.

It is not suggested that Stewart, Watmough or Kennedy were involved in any wrongdoing in connection with Mr Melhem.

Mr Melhem has a number of colourful business partners including Auburn brothel owner Saim Semaan and convicted cocaine dealer Joe Frangieh, with whom Mr Melhem was involved in a Queensland property company.

Mr Melhem is also an associate of Hells Angels' bikie bosses Daniel Callaghan and Wayne Schneider, who was murdered in Thailand in 2015.

Mr Melhem was refused bail and will be back before Burwood Local Court on October 11.