Act leader John Banks has denied thanking Kim Dotcom for a pair of $25,000 donations to his 2010 campaign for the Auckland mayoralty.
Dotcom claims he made a $50,000 donation to Mr Banks campaign after meeting him in April 2010.
The payment was divided into two at Mr Banks request - so he could avoid disclosing where the money came from, Dotcom claims.
Mr Banks later phoned to say thank you for the donation, Dotcom said.
In a press statement issued this afternoon, Mr Banks said he was not aware of any donation Dotcom made to his mayoral campaign.
He said the thank you call to Dotcom was for a $500,000 fireworks display he put on for New Year's Eve in 2010, rather than for any campaign donations.
"I did not call him to thank him as the donation was made anonymously.
"I can confirm that I had contact with Mr Dotcom on other matters, including thanking him for the generous $500,000 donation that he made to the ratepayers of Auckland for the 2010 New Year's Eve fireworks display, however I never called and thanked him for any donation to my Mayoral campaign.
I could not have as any such contribution was anonymous."
Mr Banks said he would not comment further as an investigation was underway.
Cheque details revealed
The cheques paid into the mayoral campaign fund for Mr Banks by Dotcom were written out for $25,000 each and sequentially numbered from the same chequebook.
Dotcom said the cheques support his statement that Mr Banks asked the cheques to be divided into two payments to avoid disclosing the money came from the internet tycoon.
Mr Banks' donation declaration contained five payments of $25,000.
Dotcom also corrected the date on which the donation was made after a search of his financial records.
He said financial records showed the cheque was signed on June 9, 2010. The cheques of $25,000 each came from the Megastuff Ltd chequebook and were numbered one after the other.
"It doesn't make much sense why anyone would write cheques that way unless they were asked to," he says.
He said the initial belief the cheques were signed on April 15 was based around an earlier meeting and call with Banks. He said the research into the financial records had helped him pin down exactly which meeting the discussion around the donations took place.
Police confirm complaint
Meanwhile, police have confirmed a complaint has been made over a donation received by Mr Banks from Dotcom, as the Prime Minister continues to stand by his minister.
John Key has this morning reiterated that he is taking Mr Banks at his word over the donation controversy, and that it is not his job to investigate him.
The donations were made the day after the two men met in an April 2010, and Dotcom said Mr Banks later called him to thank him for the donation.
Mr Banks has been accused of deliberately trying to conceal where the money came from, despite knowing who the donor was. He has denied the claims, saying he does not remember discussing the donation with Dotcom.
Labour MP Trevor Mallard has said he will go to police over Mr Banks' failure to disclose the donations, and the Opposition has called for Mr Banks to be stood down from his ministerial portfolios while the allegations are investigated.
Detective Inspector Mark Benefield of Auckland police confirmed he'd received a formal complaint from Auckland Council's electoral officer Bruce Thomas on Friday regarding the SkyCity donation of $15,000.
However he also confirmed he'd received a complaint by phone from a member of the public regarding the alleged Dotcom donation of $50,000.
He was now waiting for email confirmation of that complaint from the person concerned.
Both matters would be dealt with in the same inquiry Mr Benefield said.
"We will be investigating both.''
"It's the same return and it's the same bit of infomation so we'll assess what's in there and go from there.''
Key - again - stands by his minister
However, Mr Key is standing by the minister, saying today that Mr Banks had assured him he complied with all the local government laws and regulations.
"I've asked him, and got a very straight answer, and have no reason to doubt that,'' Mr Key told Newstalk ZB this morning.
Asked whether he should probe the situation a bit further, Mr Key said that was not his job.
"We've directly gone and asked the direct question and sought a cast-iron assurance and got one, that's all you can do with any minister,'' he said.
"I know John well, I've known him over a number of years, he's never misled me ... if people don't like it, go to the police, that's their job to go and do an investigation.''
Dotcom has said he will produce financial records to back up his allegations.
Labour leader David Shearer said Mr Key was prepared to turn a blind eye to a potential breach of electoral law to protect his political ally.
"John Key says it's not his job to conduct a forensic examination of John Banks' political donations. Fair enough. The police can do that. But the Prime Minister should just ask his minister a very simple question - did he know that the donation to his mayoral campaign came from Kim Dotcom?'' Mr Shearer said in a statement.
"The Prime Minister has a responsibility to ensure that his ministers are behaving appropriately and within the law. There are now serious concerns about John Banks' actions relating to several donations. That should be more than enough to warrant standing him down from his ministerial portfolios until an investigation can be carried out.''