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Former construction boss Lino Zambito testifies before the Charbonneau inquiry on Oct. 1, 2012.

PAUL CHIASSON/The Canadian Press

A construction boss said he offered to make cash donations to a provincial party fundraiser who is now a Conservative senator, only to be told to make his contributions through a series of personal cheques.

Lino Zambito said his offer to Conservative Senator Leo Housakos showed that the former head of a construction firm was willing to break the rules to offer a financial contribution to the Action Démocratique du Québec. Only individuals, not companies, can give money to political parties in Quebec.

Mr. Housakos denied taking part in any improper fundraising, but confirmed that he had a conversation in 2008 over the "form" of Mr. Zambito's donations to the since-disbanded provincial party.

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Mr. Zambito, who testified about a wide range of infractions to electoral laws last year at the Charbonneau inquiry into corruption in the Quebec construction industry, said he eventually sent a total of about $20,000 to the ADQ, through small personal cheques from individuals that he later reimbursed in cash.

"I offered to pay [Mr. Housakos] in cash and he said, 'No, I prefer cheques; it's easier for the party,' " Mr. Zambito said in an interview Tuesday.

Mr. Zambito has no evidence that Mr. Housakos was aware that the cheques to the ADQ went against Quebec's political financing rules, but he argues that Mr. Housakos, at the very least, should have been aware of the potential for wrongdoing. "Like other organizers, he wanted cheques, and it was up to me to figure out how to get them," Mr. Zambito said.

Mr. Housakos, a former ADQ fundraiser who was appointed to the Senate in late 2008 by Prime Minister Stephen Harper, rejected Mr. Zambito's characterization of their meeting.

"I recall him actually asking me, 'What form can I make a contribution?' " Mr. Housakos said in an interview.

Mr. Housakos said he explained the rules under Quebec's elections laws, namely that the donations were to be made through personal cheques, with a maximum of $3,000 a year by donor. According to Mr. Housakos, Mr. Zambito also asked whether he could provide company cheques or pay an invoice on behalf of the ADQ – which would also constitute illegal donations.

"He didn't offer me cash. What he said to me was, word for word, 'What form?' Which, in itself, you can say, should have raised red flags, whatever the case may be. But you know what? I was doing my job, and my job was to make clear what the rules and regulations were, and I followed them," Mr. Housakos said.

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Mr. Zambito acknowledged that he was a lifelong Liberal and was providing funding to the ADQ in case the party, which finished second in the 2007 provincial election, ever formed government. "In 2008, I didn't believe they had a shot, but I figured they if they ever took power, they might remember us," Mr. Zambito said.

Mr. Housakos said he offered "absolutely nothing" to Mr. Zambito in exchange for the donations.

In Ottawa, the opposition called on the Conservative Party to look into whether it was the recipient of illegal donations, given that Mr. Housakos also worked as an organizer for the federal party.

"The Prime Minister should try to find out if the same sort of system was put in place for the Conservatives. The testimony indicates that there was a system put in place," NDP Leader Thomas Mulcair said on Tuesday.

A spokesman for the Conservative Party, Corey Hann, responded that the government tightened financing rules on the federal stage shortly after taking office in 2006.

"We only accept individual donations within the legal limit. We banned corporate donations and imposed a strict limit on personal donations," Mr. Hann said.

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