New Zealand First was given a $3000 cheque by People's Party founder Roshan Nauhria, but it was never handed to Winston Peters, a third person at their meeting says.
Mr Peters earlier denied he accepted the cheque after Mr Nauhria accused him of being hypocritical for attacking him about political donations.
Mr Peters had described the new People's Party as a front for National, because Mr Nauhria bid $20,000 at an auction in a unsuccessful attempt to win breakfast with the Prime Minister.
Mr Nauhria said that was hypocritical because Mr Peters had personally accepted $3000 from him at an Indian restaurant in 2014.
"He took a cheque from me and other people who had collected their cheques together, and he put it in his pocket."
Mr Nauhria said he wanted an apology from Mr Peters.
But speaking to Morning Report today, Mr Peters denied he had ever received the donation, and said he would not apologise.
He said while the party did receive the money, the cheque was not given to him.
"I'm denying the fact that he gave anything to me, in the way you've got to personalise this story. Winston Peters is the leader of a party called New Zealand First. They're two different entities."
Indian businessman Giri Gupta, a friend of both Mr Peters and Mr Nauhria, was at the restaurant facilitating the meeting.
He said he was the one who had received the money, which he then passed on to New Zealand First.
"At that time, four or five people gave small, small sets of donations. One of those sets were $3000 from Roshan Nauhria. All the sets were given to me, Giri Gupta," he said.
"At no stage [did] we hand over the money to Winston Peters," he said.
Mr Gupta then passed the money on, either to New Zealand First MP Mahesh Bindra or another member of the party, he said.
Mr Nauhria was a good friend of his, Mr Gupta said, and had a history of making donations to a range of parties including National in a bid to help the Indian community.
Mr Peters also told Morning Report it was embarrassing that someone would have the audacity to set up an immigrants party.
"Frankly a whole of New Zealand people are getting sick and tired of people who think they can walk into our country and now demand to have a say in the political system, which is available to them in every other political way, votes at an election time, but no, demand to have a race-based party. My party is against race-based politics, and will carry on being."
Mr Nauhria said he had been living in New Zealand since 1972.
Parties still open to a NZ First deal
Both Prime Minister John Key and Labour leader Andrew Little said their parties remained open to working with Mr Peters, in a post-election deal.
Mr Key said he would not work with Mr Peters ahead of the 2008 and 2011 election campaigns, but changed his stance in 2014.
While Mr Key said he took everything Mr Peters said with a grain of salt, he was not ruling out a post-election deal.
"We neutralised him in 2014, we haven't made a call for 2017, but it's highly likely we are just going to go in there and say 'look, we'll work with political parties that will work with National'. We know that that won't be the Greens, because they have effectively ruled us out and gone into an agreement with the Labour Party."
Mr Little said Mr Peters had always kept his word in any of their dealings, and he was open to working with him in the future.