Newfoundland and Labrador's federal cabinet minister Peter Penashue says he did nothing wrong by taking out a $25,000 loan from a controversial Innu company to help fund his 2011 federal election campaign.

Penashue took out the loan from the Innu Development Limited Partnership, a company that's under fire for paying its former CEO Paul Rich $1 million in salary over two years and giving big bonuses to other Innu leaders.

The IDLP is owned by two Labrador Innu communities — Sheshatshiu and Natuashish. Some residents have been saying it wasn't right for community money to be used for election campaigns.

Penashue defended his loan at an event in Halifax on Wednesday.

"I'm in the process of paying that back and have paid half that back," said Penashue. "And this is, you know, according to the Elections Act, this is all above board."

Elections Canada documents said the loan was interest free. Penashue insists that was a mistake and he is paying seven per cent interest on the loan.

Penashue had other connections to company

The IDLP's former CEO, Paul Rich, is Penashue's brother-in-law.

However, Penashue wouldn't comment on whether the $1 million that Rich made in two years with the IDLP was an appropriate salary.

"This has got nothing to do with me," declared Penashue. "Innu Economic Development is a separate entity, a separate board, and they have shareholders they have to be accountable to."

Penashue also did work for the IDLP as an advisor while he was Deputy Grand Chief of the Innu Nation. His staff maintained he was paid only $500 for that work.