Montreal Mayor Gérald Tremblay and Vision Montreal Leader Louise Harel are denying allegations made by the city’s former leader of the opposition about influence peddling and questionable fundraising practices in the city.

In an interview with Radio-Canada, Benoît Labonté described how parties get around provincial political financing laws by recycling corporate cash donations to individuals who would return the money through cheques.

Labonté, who until Sunday was Harel's right-hand-man, said the practice is used "in all the parties, municipal and provincial," and is still ongoing at Vision Montreal.

He also alleged that the mayor was aware that companies that were being awarded contracts were giving kickbacks.

Tremblay says allegations of problems at city hall come as good news to him, because it means the cone of silence cloaking backroom municipal dealings has been broken.

The mayor told CBC News that he is ready to work with government officials charged with reviewing political party financing rules, and also with a new provincial squad asked to probe allegations of collusion involving the construction industry.

"We said to the government, we will give you our entire collaboration," he said Friday morning, after an in-studio interview with CBC's French-language service.

Tremblay dismissed Labonté's accusations that he has long known about widespread corruption at Montreal city hall as rumour, and questioned why Labonté sat on this knowledge for so long.

"He had a unique opportunity with these facts — if he has the facts — to talk about it," he said. "He did not do it. He could have gone to the police. He did not do it."

Tremblay said he "remembers a discussion that I had with [Labonté] that he had heard rumours" about civic party Union Montréal was collecting kickbacks from city contractors.

He did what he said he always does when concerns are raised: "I verified those rumours and the hearsay, and I found no relevant facts to give, to follow up on what he said," Tremblay said.

Labonté's credibility is questionable at this point in time, he added.

Implemented new rules

Harel also denied knowledge of the type of fundraising practices described by Labonté.

"Listen, in 27-and-a-half years I've never used the systems described by Mr. Labonté," said Harel, responding to reporters questions Friday.

Upon her arrival at Vision Montreal, Harel said she implemented strict new rules, which include rejecting all anonymous donations.

The names of all donors and the amounts given are inscribed on her party’s website, Harel said.

She said the party had also scaled back the scope of its campaign in order to avoid the dependence on money.

"What I also heard from Mr Labonté is that he considers that my personal integrity is spotless," said Harel.

Harel reiterated that she acted quickly in addressing allegations made against Labonté by kicking him out of the party.

The former opposition leader dropped a bombshell last weekend when he announced he was quitting politics, leaving his Vision Montréal party, and pulling out of the municipal election.

Labonté's departure came after information came to light that he met with Tony Accurso, a Montreal businessman linked to the city’s water-meter scandal and accepted a $100,000 campaign donation.

One of Accurso's companies is also being investigated as part of a sweeping federal tax fraud probe.

Labonté's admission he accepted the money was instrumental in pushing the provincial government to pledge political party financing reform this month.