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The National Party received a $50,000 donation from an Auckland BMW dealership just days after the Government signed a deal to upgrade its BMW limo fleet, Labour says.
National has not denied the donation but says Labour's accusations are a "baseless smear".
The decision to replace the Government's 34 three-year-old BMW limousines with new ones sparked anger in February, with the move seen as hypocritical against a backdrop of ministerial calls for spending restraint.
Labour MP Chris Hipkins said today that the donation from the Team McMillan dealership was made two days after a July 28 meeting last year between Prime Minister John Key's chief of staff and VIP Transport, which is contracted to supply the Government limo fleet.
Mr Hipkins said Mr Key had also attended a function hosted by Team McMillan a few weeks before the deal.
Responding to a question from Mr Hipkins in Parliament today, Mr Key said he had no responsibility in the matter.
"That's the very reason actually why contracts, as subject to the Cabinet manual, are actually made by ministerial services -- to avoid accusations that would otherwise present as inappropriate conduct."
Mr Key, in a statement, said the accusations were false and Labour had resorted to gutter politics.
"The company named in the House is an Auckland dealership -- and is not the company which the Department of Internal Affairs signed the contract with for the replacement of the VIP Transport fleet," he said.
"This is not only a baseless smear on my integrity, it is also a smear on the integrity of officials in the Department of Internal Affairs who are responsible for the contract."
Labour MP Trevor Mallard, speaking in Parliament today, said there was "at least a perception" of conflict of interest.
"If that happened in Australia, or Thailand or India, I would say it was corruption," he said.
The Government in February said it had bought the cars at a discount price and had negotiated a good deal.