Frank Coleman, who is poised to become Newfoundland and Labrador's next premier, says no one did anything wrong with a paving contract involving the company he used to run, even as the Opposition is alleging an enormous conflict of interest.

The provincial government allowed Humber Valley Paving to walk away without penalties from a contract involving a job it had started — but did not complete — on a section of the Trans-Labrador Highway.

Frank Coleman sold his stake in the company before launching his campaign for the Progressive Conservative leadership in March, although the government confirmed Tuesday that it was negotiating with Coleman's son, Gene Coleman, after the campaign started.

Andrew Parsons

Opposition House Leader Andrew Parsons alleges there was a conflict of interest in the government's negotiations with Humber Valley Paving. (CBC)

Although the issue sparked a fiery debate in the House of Assembly, Coleman said he sees nothing wrong.

"You know I think there's a lot more made of this than is deserved," he told CBC News.

"I don't see where any conclusion could be drawn that implies some heinous act.  And I think, it's very regrettable the kind of inference that is being drawn here."

Coleman stepped down from the Humber Valley Paving board three days before it asked government to be released from the terms of a contract, which government revealed on Tuesday was attached to two bonds worth a total $19 million. Until then, government had said there was only one $9.5-million bond.

'Something stinks here'

Opposition House Leader Andrew Parsons said the revelations are deeply concerning, particularly since Coleman is the only candidate in the race to take over the governing Tories.

"There's a huge, huge conflict of interest at play here," Parsons said.

"The incoming premier owes an explanation to the people of this province. This is a gentleman that was directly involved in Humber Valley Paving, and there's obviously something going on here. There's something that stinks here."

The NDP, meanwhile, is calling on the auditor general to investigate the controversy.

The government released Humber Valley Paving from a $20 million contract to complete about 80 km of the Trans-Labrador Highway. The government agreed that there were circumstances beyond the company's control, including fires in western Labrador that shut roads and prevented materials from being shipped.

No improper influence: McGrath

Transportation and Works Minister Nick McGrath said the fact that Coleman had entered the PC leadership race did not influence any decisions.

Nick McGrath

Transportation and Works Minister Nick McGrath said it would have been wrong to have called the bonds attached to the Humber Valley Paving contract in Labrador. (CBC )

"I take my duties as a minister of the Crown very seriously, and that would me very unprofessional if I were to put personalities in place like that," McGrath said.

"So, in no way shape or form would I be influenced because of the personality or the relationships that I was dealing with when dealing with any contractor."

Liberal and NDP critics have questioned why government did not called bonds to force Humber Valley Paving to complete the work. The company completed about 60 per cent of the overall scope of the contract, and received 60 per cent of the contract's value.

But McGrath said such a move would have put the company out of business, and would have taken a long period of time, as well.

"If I had called in the bonds, I would not have got the job done on time and on budget," McGrath said.

"The job would have been delayed to go through the bonding agency process, which could be very lengthy [and] could lead to litigation."

With files from Peter Cowan