The chief executive of Canstruct International paid $3,500 to the Liberal National party to attend a business dinner while the company was negotiating a contract with the home affairs department eventually worth $591m.

But Canstruct’s chief executive, Rory Murphy, says attendance at the function had “no bearing” on the government department’s decision and any suggestion it did was “ridiculous”.

According to Electoral Commission of Queensland disclosures, Murphy donated $3,500 to the LNP on 10 October 2017, just weeks after a letter of intent was issued for Canstruct to take over garrison and welfare services from Broadspectrum on Nauru.

A further $3,000 payment was made in November 2018 by a company of which Murphy is a director.

Guardian Australia is not suggesting any link between the $3,500 paid to the Liberal National party and the successful negotiation of the contract with the home affairs department.

Murphy has strenuously denied any link between the payments and contract negotiations, telling Guardian Australia both payments “were for dinners that provide companies with the opportunity to hear from senior MPs about policy”.

Such functions “are held regularly and used for fundraising by all political parties, and are attended by many business people from across the corporate sector,” he said in a statement.

“The suggestion that attendance at a function like this has any bearing on a contract with a government department is not only ridiculous but a deliberate attempt to mislead, smear and create controversy when there is none,” he said. “I and the companies in which I have been involved have always acted ethically.”

In Senate estimates in October 2017 home affairs officials revealed the department issued a letter of intent on 28 September to Canstruct for a six-month $8m contract for garrison services on Nauru.

The officials said the department went to market in 2015 and Broadspectrum and Serco entered negotiations but then declined to enter formal bids. The department then chose Canstruct through a limited tender with only one bidder – Canstruct – because no other companies responded expressing an interest. Contract negotiations had not finished on 23 October 2017.

David Nockels, the first assistant secretary of detention services, said Canstruct was “predominantly a civil construction company” but it was appropriate for the contract because it had “extensive experience in managing mining camps … delivering the garrison-type services that we require”.

The Canstruct deal was struck not long after the auditor general had criticised the department for the way it handled its contracts on Nauru and Manus Island, saying it “has fallen well short of effective contract management practice”.

Details of the $8m contract were first published on 13 October 2017, which officials explained was an upfront payment to allow Canstruct to hire staff before taking over services on 1 November.

The contract was then amended to a value of $385m on 16 November 2017 and extended to a total of $591m on 2 November 2018 for a contract to run from 28 September 2017 to 30 April 2019.

On 19 November 2018 Mag Modular Pty Ltd – a company registered at the same Brisbane address as Canstruct International and of which Murphy is a director – made a further $3,000 donation to the LNP.

In February Guardian Australia reported that evidence to Senate estimates suggests Canstruct had previously donated to a Liberal-linked fundraising entity, Forward Business Leadership, an associated entity of the Queensland Liberal National party.

“The donation referred to was made over 10 years ago for a local council campaign,” Canstruct said in a statement.

The home affairs secretary, Michael Pezzullo, said in 2017 that such donations would not necessarily bar a company from the tender under the commonwealth procurement guidelines.

“I’m not sure that there’s any prohibition per se,” he told estimates. “Most of these matters are always managed at arm’s-length from ministers. This sort of contract, even though it’s a large sum of money, we’re very careful with every single dollar of the taxpayers’ money that we get.”