The businessman who helped persuade David Blunkett to join a biotech firm has said he cannot understand how the furore has erupted over the affair.
The Lib Dems want Mr Blunkett to make a personal statement
Tariq Siddiqi's wife Lucy is a director of DNA Bioscience, the firm Mr Blunkett joined when he was out of the Cabinet.
Mr Siddiqi told BBC News: "I don't understand what the problem is."
His comments came after Mr Blunkett insisted he would not resign despite standards watchdogs saying he broke the ministerial code of conduct.
The Conservatives are now raising new questions after it emerged that Mr Blunkett had taken a third job during his spell out of government without informing the proper authorities.
The row centres on Mr Blunkett's appointment as director of DNA Bioscience before May's general election, while he was out of the Cabinet, and his holding of shares in the firm.
He was in the job for a fortnight, resigning when he was appointed work and pensions secretary.
The Cabinet minister said on Monday he had decided to ask his sons to dispose of the shares - reported to be worth £15,000 - to avoid "continuing misinterpretation of the position".
Mr Siddiqi said he was "saddened" by the damage done to Mr Blunkett, who he described as a very talented politician.
"With hindsight it looks like there is a conflict of interest but if an MP does his job properly then he should be able to keep things apart," he said.
"But he is no longer in touch with the company. He is no longer doing anything with the company and the times he went out with us we never discussed DNA at all.
"So that's why I do not understand what the problem is."
The businessman also said it was valuable to have Mr Blunkett involved in the company because of his personal experience of DNA testing - a reference to his paternity suit.
Mr Siddiqi revealed that Mr Blunkett had thought he might return to the Cabinet - but as transport secretary.
BBC political editor Nick Robinson said Mr Siddiqi wanted to help Mr Blunkett but that revelation could produce more questions.
Earlier, letters showed Mr Blunkett was warned three times to seek advice from a special committee about taking jobs while out of Cabinet, but failed to do so.
As a result, says standards watchdog Sir Alistair Graham, Mr Blunkett broke the ministerial code.
The Tories have written to Tony Blair after it emerged Mr Blunkett took a third job without seeking advice - with charitable organisation World ORT.
Shadow Commons leader Chris Grayling has written again to Mr Blair about Mr Blunkett's conduct, which he said "is getting beyond a joke".
But Downing Street said Mr Blunkett had accepted he had made a mistake but Tony Blair did not believe it stopped him doing his job.
Mr Blunkett was defiant in an interview with his local newspaper in Sheffield, saying he had done nothing wrong.
He told The Star: "The pressure is not continuing. The prime minister has made his decision and, no matter what the Conservative Party want, I am not resigning.
"This is a straight political battle with the Conservative Party and their allies in the media, and decency."
Senior Labour MP Ian Gibson said if he was Mr Blunkett he would resign.
And the Liberal Democrats want Mr Blunkett to make a personal statement in the Commons, so that he can answer questions about his business dealings.
But Trade Secretary Alan Johnson said: "It's about time the open season on David Blunkett finished and he was allowed to get on with his job."
Mr Blunkett stepped down as home secretary last year over claims his office had fast-tracked a visa application for his lover's former nanny.