Melissa Lee

Wellington, Oct 13 NZPA - Broadcasting Minister Jonathan Coleman will face questions in Parliament today as Labour tries to find out when he first knew a National Party MP's company was under investigation.

TV3 News reported last night list MP Melissa Lee had been asked by NZ on Air to explain why her television production company, Asia Vision Ltd, failed to return $100,000 of unspent contingency funds.

The letter from NZ on Air, which provides taxpayer funding for locally produced programmes, said the company seemed to have acted in a way that was in breach of its funding contract.

Ms Lee said in a statement last night the company had corrected "a technical accounting mistake" and would pay back any money NZ on Air deemed to be outstanding.

She said the company had reduced its profit margins so it could continue making television programmes and maintain a contingency fund at the same time.

"This has come as a total surprise, the company wasn't aware that the money set aside in the contingency was technically expected to be refunded," she said.

Ms Lee, a list MP, was National's candidate in the June 13 Mt Albert by-election and during the campaign faced allegations that her company had misused taxpayer funds for political purposes.

NZ on Air cleared her of those allegations, and the latest revelation was not connected with them.

The letter NZ on Air sent to Ms Lee was dated June 12, the day before the by-election, but the issue was not revealed during the campaign.

Dr Coleman, who is responsible for NZ on Air, said he first knew about it on August 18 and it was an operational issue that Ms Lee had to sort out.

Labour's deputy leader, Annette King, said he must have known what was going on.

"Unless he fronts up and tells the public what he knows, he could be accused of a cover-up," she said.

"He must have known about it. It's never been disclosed, no one has ever known it existed."

Parliament returns from a two-week recess today and Labour will use question time to grill Dr Coleman about exactly what he knew, when he knew it and why the issue wasn't disclosed.

TV3 said a whistleblower sent it a copy of the NZ on Air letter. Labour has the same document.