The French Polynesian presidency says it will take legal action against the opposition's Gaston Flosse for alleged defamation after the veteran politician announced that he would take the President, Oscar Temaru, to court for alleged fraud.
The dispute centres on the affairs of US-based noni juice company, Morinda, which Mr Flosse says was allowed to get away with eight million US dollars in tax exemptions in a move that amounted to abuse of public funds by the government.
But the president's office says Morinda's activities were challenged by the tax authorities to ensure they complied with the law.
It says the checks were carried out before May 2004 when Mr Flosse was still the territory's president.
The statement says Mr Flosse is not well placed to make such accusations when questions have been raised about links between him and Tahiti's Shell petroleum company.