A political ally of Jean Chretien returned to Parliament Hill Monday to accuse Prime Minister Paul Martin and his former advisors in the finance department of cronyism and contract rigging.

Warren Kinsella, who advised former prime minister Jean Chretien and his team during the nasty battle for the Liberal Party leadership, appeared before the Public Accounts Committee to read from a letter he wrote in 1994, in which he originally made his complaints.

Testifying under oath, Kinsella made an even more serious charge, suggesting his old boss -- former public works minister David Dingwall, now CEO of the Royal Canadian Mint -- would deny his accusations under government pressure.

"I received a phone call from an individual a few minutes before I came here indicating that Mr. Dingwall would disavow everything I had to say here today," Kinsella said.

He refused to name the caller publicly, but said he would pass on the name to the committee chairman.

Tampering with witnesses before a commons committee is a serious offence, but Martin's office denied anyone there interfered.

"I don't think it's at all damaging," said PMO spokesman Scott Reid. "I think people see Warren Kinsella for what he is. I think his testimony is flat out false lies."

"Consider the source," added Liberal strategist John Duffy on CTV's Canada AM. "There is no more bitter adversary of Paul Martin in this country than Warren Kinsella. . . . This isn't exactly coming from a Liberal insider. It's not friendly fire."

Kinsella was appearing before the committee to claim that top Martin adviser Terrie O'Leary steered contracts to a consulting firm that served as Martin's in-house leadership team.

O'Leary appeared at the hearing as well, beside her companion David Herle. He was a senior partner at the consulting firm in question, Earnscliffe Strategy Group.

Kinsella wrote his letter to O'Leary in 1994, when she was Martin's chief of staff. Kinsella complained that bidding rules were flawed, too much money was being spent on some consulting work, and some of the work wasn't necessary.

He also suggested Earnscliffe was getting the work because of its "political connections.''

If Kinsella's allegations are true, it puts Martin in a dilemma. Last week, he vigorously denied he ever meddled in federal contracts. He said he left such matters to deputy ministers.

O'Leary denied being involved in the discussions or decisions on contracting.

The only goal of the Finance Department, she said, was to open up the contracting process to fresh bidders and new talent.

Sounding much angrier, Herle, whose firm earned almost $6 million from federal work since 1993, lashed out at Kinsella and the opposition-dominated committee, saying they were smearing Martin.

"If you ask me about Mr. Kinsella's motivations, he's as strong a political adversary of Mr. Martin and of myself and Ms. O'Leary as exists in this country," Herle said.

CTV Ottawa Bureau Chief Robert Fife characterized Kinsella as "a longtime spear-thrower for the Chretien forces."

"He has a well-deserved reputation as an attack dog and has been very upset with Martin for calling the Gomery inquiry," Fife said. "We are in a highly politicized environment right now and some of these allegations should be taken with a grain of salt."