Expatriate billionaire Owen Glenn says New Zealand First leader Winston Peters personally solicited a $100,000 donation and then thanked him for it.
But Mr Peters says Mr Glenn has key facts wrong and in a sign he will fight the claims by attacking the Monaco-based billionaire's credibility, one of his MPs today described Mr Glenn's statement as contradictory.
"I think Mr Glenn's credibility is at stake," Dail Jones told reporters.
Mr Peters has previously said he had no knowledge of the donation made to his lawyer Brian Henry in 2006 to help pay his legal costs, until Mr Henry advised him of it last month.
Parliament's privileges committee is looking into whether Mr Peters broke Parliament's rules by failing to declare the donation, which could be treated as a personal gift.
In a written statement to Parliament's privileges committee, released this morning, Mr Glenn said Mr Peters had sought the donation from him.
"The payment was made by me to assist funding the legal costs incurred personally by Rt Hon Winston Peters MP concerning his election petition dispute, at his request.
"Mr Peters sought help from me for this purpose in a personal conversation, some time after I had first met him in Sydney.
"I agreed to help in the belief that this step would also assist the Labour Party in its relationship with Mr Peters. I supported the Labour Party."
Mr Glenn said the conversation had occurred "some time after I had first met him in Sydney" and he had authorised the payment on or about December 20, 2005.
Mr Peters had then thanked him at the Karaka yearling sales in early 2006. He did not believe he had ever met or spoken to Mr Henry.
But in a written letter to the committee Mr Peters said he believed Mr Glenn had key facts wrong.
Mr Glenn's assertion he had personally requested money "does not coincide with my recollections" and he said he believed the "personal conversation" referred to by Mr Glenn was one with Mr Henry.
He also said he believed he and Mr Glenn had lunch at the same table at the 2007 Karaka sales, rather than in 2006.
Mr Peters said he had not thanked him until after Mr Henry advised him of the payment on July 18.
ACT leader Rodney Hide, who lodged the privileges complaint, said Mr Peters credibility had been "shot to bits".
"It's very clear now that Winston Peters has misled the public of New Zealand."
He had also misled Prime Minister Helen Clark, Parliament, the Speaker and the privileges committee and Miss Clark should immediately stand him down as her Foreign Affairs and Racing Minister, Mr Hide said.
The only reason she hadn't sacked him so far was because the Government was reliant on NZ First to pass its emissions trading legislation. It is waiting today to hear back from NZ First on whether it will support the legislation.
He said Miss Clark's stance was "disgusting and unethical".
Prime Minister Helen Clark yesterday said she would continue to accept Mr Peters' word that he had not misled the public or broken the law unless contradictory evidence emerged.
A spokeswoman today told NZPA that Miss Clark had not seen the letter or Mr Peters' response to it and would not be immediately commenting.
Privileges committee chairman Simon Power today said the two statements were inconsistent and the committee would meet again to consider them next week.
Mr Peters could also face trouble on a separate front with Mr Hide expected to air more allegations against him in Parliament today.
Mr Hide yesterday used parliamentary privilege to allege Mr Peters asked fishing boss Peter Simunovich for $50,000 to "shut up'' over claims his company was corrupt.
Mr Hide said a businessman who was making the allegation had made a statement to the Serious Fraud Office, which is looking into undeclared donations to NZ First.
In 2004, Mr Peters said Simunovich Fisheries had not donated any money to NZ First, but yesterday he indicated NZ First may have received some cheques but not cashed them.
NZPA
Listen to Rodney Hide's comments as he spoke to RadioLIVE