Ms Lee stood as a list candidate in last year's election and continued working for her broadcasting company, which makes Asia Downunder for TVNZ, during the election campaign.
She successfully made it into Parliament and is now contesting the by-election for an electorate seat.
Labour says the company received $1.2 million from New Zealand on Air last year including money used in October for an election special.
Ms Lee said she had not presented or taken part in production of the programme, though Labour said staff members had said they felt pressured by her. Labour leader Phil Goff said Ms Lee had used staff to make a political promotion video that was not declared in election expenses.
Ms Lee said the staff members donated their own time, but Mr Goff argued this was not the case.
"That was certainly not the view of the staff members that worked for her there. Their view quite clearly was equipment and staffing paid for through NZ on Air was misused to produce the national party election video."
NZ on Air chief executive Jane Wrightson said Ms Lee's candidacy was known to NZ on Air and the conflict of interest had been managed.
"We are looking into the allegations, but we haven't decided on whether to hold an audit," Ms Wrightson said.
Ms Lee had gone off screen and an independent producer had been brought in.
"She had no editorial control."
The allegations that Ms Lee had stood over an employee while the election programme was produced were wrong because this had been done by the independent producer.
The production of the video broadcast had also been apparently done by employees in their own time.
"There is nothing wrong with that either," Ms Wrightson said.
"We are verifying that information so we can say `hand on our heart' we believe it and there has been no misappropriation of public funds."
Mrs Wrightson said the programming had been funded for 20 years and just because a person involved had decided to run for Parliament was not a good reason to cut it."
It had been a matter of managing the conflict of interest and NZ on Air believed this had taken place.
In Parliament, National managed to avoid answering questions about Ms Lee due to its rules that the Prime Minister John Key is not responsible for actions of MPs.
Mr Goff said in Parliament there were serious allegations and Ms Lee and Mr Key should front up.
Mr Goff also questioned Mr Key's judgment in allowing Ms Lee to continue working at the company after she became a candidate.
