Liberal leadership hopeful Joe Volpe has returned about $27,000 in donations made to his campaign in the wake of reports that he received contributions from children of corporate executives.

A spokesperson for Volpe's campaign said money from five donors under the age of 18 have been returned.

Volpe came under fire recently for receiving $108,000 in donations from 20 former and current executives of generic drug company Apotex Inc., including their wives and children.

The children reportedly included two 11-year-old twins and their 14-year-old brother, who made donations of $5,400 each.

Spokesperson Corey Hobbs insisted that the donations followed the letter of the law involving corporate political donations.

"All donations were in compliance with the law and there were no rules broken here," Hobbs told CTV.ca.

"But after statements Mr. Volpe made last night, it was determined that five donations will be returned."

Volpe told CTV's Canada AM on Thursday that he spoke to mother of those children whose donations came into question.

"They're kind of embarrassed about the controversy. "They had made the decision for very positive reasons and someone has turned it into something very negative," he said.

"I gave them an indication that while I appreciated their support, the fact of the matter is that we wanted to set a higher standard than other people were accustomed to, and we were going to return the monies."

In a written statement issued late Wednesday, Volpe asked his financial agent to review all campaign contributions, and determine "whether or not these donations, while legal, may be perceived to be against the spirit of the Canada Elections Act."

"If such a determination is made, Mr. Volpe has instructed his financial agent to return those donations to the donor."

Volpe's lawyer also sent New Democrat MP Pat Martin a letter, threatening a libel suit if he didn't retract his accusation that Volpe perpetrated a "deliberate and well-orchestrated fraud" to circumvent the ban on corporate donations.

Martin then offered a clarification. "If I did overstate things by saying that this categorically is fraud, I meant to say that it looks like fraud and that the elections commissioner is justified in opening an investigation," he told reporters Wednesday.

"I apologize if this has injured Mr. Volpe in any way. As I say, I bear him no malice whatsoever. I wish him well in his leadership race."

But Martin maintained that the fact Volpe received $108,000 in 20 separate donations from former and current Apotex executives and their family members warrants an investigation as to whether "this amounts to corporate sponsorship by Apotex.''

"It's perfectly reasonable to assume that somebody has laundered money through their children's bank accounts in order to circumvent the donation limits of the Elections Act," said Martin, "and it's my right and my job as a member of Parliament to blow the whistle on that."

Martin said he will put forward amendments aimed at making sure sizable donations to candidates don't become de facto corporate contributions and requiring any donations from children to be deducted from their parents' contribution limit.

While a company may not contribute to a leadership campaign, all individuals, including a company's executives, employees and family members, can donate up to a maximum of $5,400 each.

The law also includes several clauses making it a crime for any individual to "act in collusion" with others to skirt the ban on corporate donations.

It's illegal to conceal the identity of donors, to compensate a person for making a donation, or to make a donation that actually comes from another person.

Maurizio Bevilacqua, another contender will be declared the 10th official candidate in the race Friday now that he has provided the necessary $50,000, his campaign told The Canadian Press.

 Carolyn Bennett was announced as the ninth official candidate Thursday.

With files from The Canadian Press