A deal which would have promised Mr Finbarr Ross protection from civil actions in return for his signing over assets was drafted in 1985 but never signed by the liquidator of Mr Ross's company.

Mr James Galliano, of Coopers and Lybrand, Gibraltar, said he did not sign the deal because his legal advisers told him he should not do so. He said he did not wish to discuss what it was that was unsatisfactory about the deal.

However it is understood Mr Galliano did not want to be seen to be "pardoning" Mr Ross, and also that he believed the assets involved were so heavily mortgaged they were of no value to the company.

Mr Ross, who is contesting his extradition from the United States, told The Irish Times earlier this week of his surprise when he was arrested in Oklahoma last month on foot of an RUC extradition warrant relating to 41 charges of fraud. He said he'd thought "everything was ok" following the drafting of the 1985 agreement.

However Mr Galliano said Mr Ross would have been advised that his side were not going ahead with the deal. At the time the deal was drafted in discussions between the various parties, Mr Ross was living in Houston, Texas. Mr Galliano travelled to Houston as did Mr Colm Allen SC, who was representing creditors, and Mr Declan Collins, an accountant who was working on the liquidation in Dublin. The idea was to speed up the liquidation by coming to an agreement with Mr Ross, but there were "certain conditions" involved and Mr Galliano said that in the end he did not sign. "It wasn't signed and therefore it wasn't binding."

Mr Galliano was appointed liquidator to International Investments Ltd by the Supreme Court in Gibraltar in 1984 and was released from the position by the court just last year on his own application. "I felt all that had to be done had been done. We had come to a dead end."

Most of the assets of the company, which collapsed in 1984 with debts of "between £5 million and £7 million", were traced to "investments which were not of a first class calibre". Some of the money may have been given away or hidden, but the bulk was identified and had been placed in "speculative investments". The investment decisions were made by Mr Ross.

"The capital was not earning any interest yet high interest was being paid out. That was part of the problem," Mr Galliano said. "From the very beginning they were offering something they could not honour. They could never have been sure that the interest being promised could be achieved."

Mr Galliano said he had told the Gibraltar authorities he believed the case warranted investigation. He also met the Garda twice in Gibraltar in the early 1990s to help them with their investigations into the IIL collapse.

No warrants were ever issued by the Gibraltar authorities and the DPP's office in Dublin decided some years ago not to proceed with the case. Last month the attorney general's office in Gibraltar asked the police there to carry out an investigation into the affair.

Mr Galliano passed on the IIL file to the Official Receiver's office in Gibraltar last year. A spokesman for the office said it appeared the assets of IIL were not sufficient to pay the fees of the liquidator. Mr Galliano did not want to disclose the liquidator's fee.