NB Liquor president Dana Clendenning denied Monday that he violated the province's conflict-of-interest law, insisting his financial dealings with a Fredericton businessman were appropriate.

Clendenning, a close friend of Premier Shawn Graham, has been hit by conflict allegations by Barry O'Donnell who claims the NB Liquor president kept billing him for lobbying work after he was named to the Crown corporation in 2006.

Clendenning spoke for the first time on Monday about the allegations in front of Court of Queen's Bench Justice Thomas Riordon, who is overseeing the two-day conflict-of-interest hearing.

Clendenning told the hearing how he and O'Donnell could not agree on a purchase price for Clendenning's Bathurst call centre.

So, he said, that is when they came up with an agreement for O'Donnell to pay Clendenning $2,500 a month for 60 months. Clendenning said that sum was designed to be a consultant's fee for advice on soliciting previous clients, personnel and technology.

Clendenning said he did get a cheque in November 2006, after he was appointed NB Liquor's president, but that was for work he did prior to being selected to lead the Crown corporation.

Clendenning also told the hearing that he met with O'Donnell in November after he was appointed NB Liquor's president and said he could no longer consult for him.

He said the payments continued for several months after he became the head of the Crown corporation because O'Donnell was late in making those payments.

Clendenning also said he filed the proper disclosure documents when he was appointed and the judge who watches over the conflict law determined there was no conflict.

Hearing told of $5M promise

Earlier on Monday, O'Donnell told the conflict hearing that Clendenning promised to line up as much as $5 million in government grants if he were paid as a consultant.

O'Donnell told the hearing that he hoped to create jobs at the northern New Brunswick call centre he bought from Clendenning after the Liberals came within one seat of forming the government in the 2003 election.

The businessman said he agreed to hire Clendenning, a former executive director of the New Brunswick Liberals, as a consultant, describing him as "a big fish in the little pond of New Brunswick politics."

Byrne expected to testify on Tuesday

Finance Minister Greg Byrne is expected to testify on Tuesday.

Byrne is a close friend of Clendenning and was the province's business minister after the 2006 election until he moved to the finance portfolio last week.

New Brunswick's conflict law says the head of a Crown corporation cannot "carry on business other than as a head of a Crown corporation" unless it has been cleared by the judge who oversees the legislation.

Nothing in O'Donnell's complaint, or in his version of events, has been proven in court.

O'Donnell never got any grants after Graham became premier and appointed Clendenning as the president and chief executive officer of NB Liquor. Graham said his ally has properly disclosed his business dealings in the past as required by the province's conflict of interest law.