The lawyer for Winston Peters, Brian Henry, has sent an email to National leader Simon Bridges and MP Nick Smith threatening legal action of up to $30 million if statements made in Parliament are repeated outside the House.
The email invites the pair "to repeat what you said in the House in public or apologise".
It also denies allegations around the NZ First Foundation, calling it "not only false but malicious".
"All loan activities are both audited and were disclosed to the Electoral Commission. They are lawful," the email reads.
When asked shortly after about the letter, Winston Peters said, "I’ve got no idea what you're talking about".
"You’re asking me about an action, the details I am not privy to, I think you should ask the person who is bringing the action, not to come to someone who is not a source at all."
In Parliament today, Mr Smith asked to table an email sent "to myself and Simon Bridges received today from the Right Honourable Winston Peters' lawyer Brian Henry threatening to sue for $30 million if statements made in Parliament are repeated outside the House with the exclusion of some personal information in that email".
Mr Smith said it was "extraordinary".
"I’m a Member of Parliament with a basic household, those sorts of numbers are scaring and worrying for my family, and I think those sorts of emails have no place in a democracy in New Zealand."
Mr Peters told media he understood the NZ First Foundation voluntarily wrote to the Electoral Commission to make itself available for communication, after it received a complaint about the foundation.
Parliamentary privilege means MPs are able to have immunities and powers in the House.