The Irish Farmers Association has called on the Tanaiste, Ms Harney, to investigate the affairs of Co Westmeath-based European Forestry Growers.

IFA Farm Forestry chairman, Mr Padraic Divilly, has urged Ms Harney to appoint an inspector if required, and to make a public report on its activities.

Mr Divilly was speaking after a creditors meeting of the company, at which the IFA succeeded in getting its nominated liquidator appointed to oversee the winding up of the group.

The company is owned by Mr Conor Mohan and Mr Leo Mohan, and is believed to have received up to £6 million from around 500 farmers to plant its Christmas trees over the past eight years. Some are now owed up to £30,000 for their trees but the precise figure outstanding is not yet clear. The company has indicated that growers' contracts have an estimated worth of £250,000.

According to the estimated statement of affairs, the company's only assets are some office equipment which is expected to realise £500 in a liquidation. The directors yesterday refused to meet more than 100 growers who had contracts with the company, insisting they were not officially entitled to be recognised as creditors. Only official creditors, mostly suppliers and some growers who had secured court judgments against the company, were allowed into the meeting.

In a statement read by the Mohans' solicitor, Mr Leo Mohan blamed the collapse of the Christmas tree market in the UK last year and recent "adverse publicity" surrounding the company, for its demise.

"We very much regret the position we find ourselves in, but unfortunately we were left with no option but to take formal steps to liquidate the company," he stated.

Addressing growers after the creditors meeting, the liquidator, Mr Aidan O'Connell, of Deloitte & Touche, assured them that he was now controlling the company's affairs.

Mr O'Connell said his immediate task is to meet with the two directors and investigate the company's current financial situation. Mr Mohan stated that the company had told growers of difficulties in the UK market in 1997, informing them it would only be able to afford to buy the mature Christmas trees for half the price originally agreed.

As a result of the collapse, he said that both directors had made loans of £100,000 each to the company and had begun negotiations with an investor for an amount of £300,000 last November. This was subsequently withdrawn after a report on RTE highlighted growers' difficulties in enforcing their contracts with European Forestry Growers, according to Mr Mohan.

"A business consulting group, Capital, approached several bankers and private institutions on behalf of the company with a view to attracting private investment. Again, due to adverse publicity, this was unsuccessful." The directors are the biggest creditors listed on the statement of affairs, claiming to be owed £100,000 each. A committee of inspection will now begin working with the liquidator. It includes the two directors, Mr Divilly and a number of growers.

European Forestry Growers was established in 1990, entering into contracts with farmers and landowners to plant Christmas trees. After three to five years the company undertook to buy the mature trees for export to Britain and Germany. Most farmers have never received any payment for their trees.