Act Party leader John Banks says he has nothing to hide with respect to donations he allegedly received from Kim Dotcom.
He has labelled the allegations as a "media beat up" and insists "everything will come out in the wash".
The Megaupload founder facing copyright infringement, money laundering and racketeering charges in the United States says he made two $25,000 donations to Mr Banks' 2010 Auckland mayoralty campaign, Campbell Live reported on Friday.
Dotcom says Mr Banks asked for the $50,000 donation to be split so it could be recorded anonymously.
Labour leader David Shearer wants Prime Minister John Key to stand Banks down from his ministerial portfolios while allegations that he didn't properly disclose the donations are investigated.
Mr Banks told media today that he had "nothing to fear and nothing to hide", and he welcomed an inquiry into the matter.
"I think you think I came up the river on a cabbage boat. I can tell you that when I signed my declaration for the mayoralty I signed it in good faith in the knowledge as justice of the peace as true and correct."
Political candidates are required by law to declare donations if they know who made them. Breaches are punishable by up to two years imprisonment and a fine of up to $10,000.
University of Otago Faculty of Law professor Andrew Geddis told The Herald on Sunday candidates were allowed to meet potential donors and advise them how to give anonymous donations.
If the candidate subsequently learns a large anonymous donation was made in the days after the conversation, the candidate can claim not to know who it came from, Mr Geddis said.
Mr Banks is small business and regulatory reform minister and is an associate minister for the portfolios of commerce and education.