"UB40 played [in 2008], and then Ziggy Marley and then I played with my band but then they got Mary J Blige to headline - and she's not a reggae performer. So he [Mr McManus] rang me and asked me to come [back]."
Campbell said that after he performed and "saved" the show, Mr McManus failed to pay all of his bill. He would not say what he was paid.
"He said to me, 'I'd never cheat you, Ali, you're my brother' ... I won't be working with him again."
McManus Entertainment runs the festival in both Australia and New Zealand but pulled out of this year's Australian leg because of poor sales.
The Australian promoters' New Zealand company - Andrew McManus Presents - went into liquidation in March last year just before it was due in court for a legal battle with band Pacific Herbs. The company owed creditors $394,000.
Mr McManus was emotional when he told the Weekend Herald that he would always be grateful to Campbell for his support and credits him with coming up with the Raggamuffin idea. He wanted to make things right.
"I owe Ali, Ali's going to get paid. Ali's my buddy, Ali and I have been through a lot together.
"I love him.
"I've never had a one-on-one to explain it to him. I didn't even realise it was an issue.
"If you said to me, Andrew have you made some wrong decisions in the last 24 months, I'd say 100 per cent yes, I have."
Campbell said the issue with McManus would not blight his return here as he loves the country and the music scene and is looking forward to his downtime.
"I probably would've said 'no' if it had been anywhere else. It'll be great to chill out in New Zealand with my crew."
The singer, who has ta moko from his time here in the 1980s - "before they were cool" - is most excited about seeing his Maori friends in Auckland.
His solo career with the Dep Band has taken off since his split from UB40 in 2008. He has completed three solo albums and is halfway through a fourth.
Campbell said he knows Rachel Hunter as the "beautiful Kiwi who married our Rod" but has yet to meet Jason Kerrison. He wanted to help create an entertaining show.
"The contestants take it seriously, so I will try to do the same - I can't wait."
Auditions will be recorded next month and the show will screen later in the year.