Business couple Earl and Lani Hagaman say they've started defamation proceedings against Labour leader Andrew Little.
"We will now clear our names in court," they said in a statement today.
"The proceedings have now been served on Mr Little."
It was revealed in April that Earl Hagaman, chairman of Scenic Hotels, made a $100,000 donation to the National Party in 2014, a month before his company was awarded a contract to run Niue's Matavai luxury resort.
The resort is heavily funded by the New Zealand Government and is owned by a trust on behalf of Niue's government.
At the time, Mr Little questioned the timing of the donation and the awarding of the contract, and called on the Auditor-General to investigate.
Earl and Lani Hagaman asked for an apology and gave him a deadline.
He didn't apologise by the deadline, saying he had told them he had a constitutional duty to challenge the actions of the Government over the expenditure of public funds.
He said he would address the issues raised by the Hagamans once the auditor-general had dealt with the referral, either by concluding an investigation or declining to hold one.
The Hagamans say they're not going to make any further comment.