Mazher Mahmood, dubbed the "fake sheikh", posed as a wealthy film producer called Samir Khan when he met the former X Factor judge at a string of luxury hotels and restaurants, jurors have heard.
Giving evidence at London's Southwark Crown Court on Thursday, he denied "manipulating" the 26-year-old after he told her she was being considered for a leading role in a Slumdog Millionaire-type film tipped for Oscar glory alongside possible co-star Leonardo Di Caprio.
Contostavlos is on trial after allegedly boasting that she could "sort out" cocaine for Mr Mahmood and put the reporter in touch with her rapper friend Mike GLC who supplied the Class A drug.
She vehemently denies brokering the deal, which was exposed in the Sun on Sunday newspaper last June.
Appearing in the witness box behind a screen to protect his identity, Mr Mahmood said he used "subterfuge" when he secretly recorded meetings with the ex-N-Dubz star as he attempted to establish whether she was involved in drugs.
"The motive here is in the public interest to expose criminality," he said.
Under cross-examination, Mr Mahmood denied that the reason for the expose was to create a "sensational story".
Contostavlos's barrister Jeremy Dein QC said: "You misled her, didn't you?"
Mr Mahmood replied: "You can't mislead somebody into supplying cocaine."
Mr Dein suggested that Mr Mahmood and his colleague "Nish" spiked Contostavlos's drink when they met at London's Metropolitan hotel on May 10 last year.
Mr Mahmood branded the accusation as "absolutely outrageous".
Mike GLC, whose real name is Michael Coombs, 36, pleaded guilty on Monday to supplying 13.9g of cocaine - which tests later showed was at 37% purity - for £820.
Contostavlos, of Friern Barnet, north London, denies being concerned in brokering the drug deal.