The Mysterious Girl singer, then 11, was in the final of the contest that Wade claims led to years of sickening sexual abuse at the hands of the King of Pop.
Pete was spotted in the first episode of the controversial two-part documentary alongside Wade wearing a pink and red bow tie and hat.
Speaking for the first time about the moment he almost met Michael, Pete told The Sun Online: “I remember that day like it was yesterday,” said Peter, who has always been a huge Jackson fan and friend of the family, as he reminisced about the contest held in Brisbane, Australia, in 1988.
“I was sad for months and months afterwards because the prize was to meet him and I never did — Michael’s album Off The Wall was the first I ever bought.
“We all had to do a video for Michael to tell him why wanted to meet him.”
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Eleven-year-old Pete came very close to Wade in the dance competition.
He continued: “I felt devastated because I was very close to winning and, obviously, I wanted it to be me.
“I remember talking to Wade at the time, but I never realised it was him [who went on to accuse Michael] until someone pointed it out to me recently.
“The audience went crazy for him because he was very good and he deserved to win it, even though he wasn’t the right age. He was just brilliant.”
Pete — who is currently on a 25-date tour of shows to celebrate the 25th anniversary of his music career — performs a Jackson hit on the final part of the show along with artists who inspire him including Stevie Wonder and Al Green.
Quizzed on whether he has ever thought about what could have happened if he had won that day, Peter added: “My mind has never gone to that, ever.
“I just wanted to meet him. It was every kid’s dream back then to meet Michael and that’s what the competition was all about.
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“I haven’t seen the whole documentary. I started watching the first 15 minutes and then I thought, ‘do I really want to see this?’
“I knew it would be very uncomfortable to watch and I don’t want to. I know at some point I will.
“In my heart of hearts I’d like to believe that [the abuse] never happened, but I wasn’t there, so I don’t know.”
Channel 4’s Leaving Neverland features the testimony of Wade and fellow accuser James Safechuck.
Wade claims he was just seven when he was first abused by Jacko, and says the singer kept an eerie full-sized replica of Peter Pan next to his bed and he was forced to bend over while being masturbated on from behind.
Both men swore under oath in 1993 they had never been abused by Jacko, but Wade later claimed he had lied in court because Michael had threatened him and “brainwashed” him into believing the relationship was normal.
Pete added: “My problem with all of this is that if it is true then we cannot and must not ignore the voices of any victims. That goes without saying.
“But if on the flip-side he didn’t do it, then what?
“We mustn’t forget that he was acquitted and there has been no evidence.
“Do we ignore what this is doing to his children and mother and brothers and Michael’s legacy?”
Peter says Michael’s family have been left “devastated” by the documentary — and they continue to deny all allegations.
“I know Tito very well,” said Pete.
“I know how devastated the family is. I feel for Michael’s mum — she’s now in a wheelchair — I fear what it’s doing to her health.
“At the end of the day, all I’m saying is that you’ve got to think — Michael is not here to defend himself.
“His mother has lost her husband and her son. She’s in a wheelchair and is having to hear all of this again and again and again. His children have to deal with this too.
“Of course if it’s true, it’s a whole different story.
“If anyone has been hurt in this, you can’t ignore that. The problem is, we don’t know if they were hurt.”
TV watchdog Ofcom has received 31 complaints about the documentary’s first part, which split Michael’s diehard fans.
Radio stations around the world have been pulling the star’s songs from the airwaves amid claims he groomed the young boys.
But 46-year-old Pete — who has been inspired by Jacko’s music and dancing — says he will continue to perform Jackson 5 songs on his tour.
He believes the pop legend’s songs should only be taken off-air if there is solid proof of any crimes.
“You can’t just ban a man’s music based on accusations”, he added.
“Thriller was written by Rod Temperton, not Michael, as was Off The Wall and Rock With You.
“Do we tarnish Quincy Jones’ work or Seida Garret who wrote Man In The Mirror?
“It’s a really difficult situation.
“If it is true then it’s beyond terrible. It’s horrific.
“Imagine how they [the alleged victims] must feel if there’s truth in it and some people don’t believe them?
“But at the same time we have to trust in the justice system and because he was acquitted of everything in 2005 it’s very difficult.
“What we don’t know is if the new allegations are true.
“If they are, then it has to be proven true for us to then decide what we’re all going to do about it because that’s what the justice system is.
“If people watch it and make their decision based on what they see, it’s only going to be based on opinion. It’s a really tough thing.
“I pray with all my heart that there is no truth in any of it, but how are we going to know?”
Pete is currently travelling around the UK to perform to loyal fans, and says the reception has been “incredible”.
He added: “I’ve written hundreds of original songs over the last 25 years and put them out on various albums I’ve had.
“I’ve been lucky enough to have had ten top five singles in the UK and 11 studio albums, with three number one records, as well as gold, platinum and double platinum albums.
“Obviously I’ve had to condense these into 20-odd songs for the tour.”
This story originally appeared in The Sun and has been republished with permission.