The chairman of Shannon Development told the Minister for Enterprise, Trade and Employment, Micheál Martin, he would be better off shutting Shannon Development completely rather than stripping away part of its mandate.

That was the position of Liam McElligott at a meeting with Minister Martin in June, one month prior to the Minister's removal of Shannon Development's enterprise functions.

It highlights the tensions that have been growing between the agency and Government over the past year.

Documents released to The Irish Times through the Freedom of Information Act reveal that Mr McElligott accused Minister Martin's predecessor, Mary Harney, of treating the company in "an appalling manner and unacceptable manner".

Mr McElligott's letter was in response to a Sunday newspaper headline, "Harney set to scrap Shannon Development". He asked Minister Harney, also the Tánaiste, in May 2004 to issue a statement refuting the contents of the article.

Ms Harney refused, saying she was unaware of the sources of the article and "that issuing a press release on the matter at this time would not contribute constructively to the decision-making process".

The correspondence also reveals that Mr McElligott first raised serious concerns one year ago over the process that led to Minister Martin reducing the company's mandate in July.

In a letter to Ms Harney in September 2004, Mr McElligott wrote: "I have no sense that we are being dealt with in an open and honest manner. I have a very strong sense that 'minds are made up' and we are being included in discussions - which I charge are quite meaningless - for the sake of discussions.

"I have in the past asked for an outbreak of honesty on the future of Shannon Development, its mandate and role.

"We for our part have approached the matter in an open and energetic manner, only to be met with nice words and no substance.

"In June, we discussed the proposal that Shannon Development would, in the interests of regional competitiveness, use its current asset base as a means of delivering development initiatives in the wider airport catchment area in order to support and underpin the work of the new airport authority.

"I have no confidence that this development model, which is in the region and national interest, is being seriously considered by anyone other than Shannon Development."

In response, Ms Harney wrote: "I strongly refute that the process has not been open and honest. This is a complex and sensitive matter and we may not be able to reach full agreement on the course to adopt.

"I would like you to believe that I am approaching this matter with an open mind with a view to finding the best long-term outcome for Shannon Development and the region as a whole."

Five days after issuing this letter, the Tánaiste became Minister for Health in a Cabinet reshuffle.

The correspondence also reveals that the Shannon Development Board was willing to merge with the Shannon Airport Authority (SAA) to overcome the airport's financial problem rather than transfer the control of the Shannon Free Zone to the SAA.

Shannon Development was also willing to forego its tourism remit in the new mandate it desired through the establishment of an "Atlantic Economic Zone", which would include Galway city and county.

However, according to departmental minutes of a meeting between the two sides last June, they record that "the Minister did not see any justification for the proposed extension of the company's remit to Galway".

"Not only are there already a large number of State agencies operating in the county, the Minister also noted that Galway was also doing quite well in terms of industrial development when compared to some areas within Shannon Development's existing remit that could be said to be in more need of support."

The departmental minutes also record that Mr McElligott told the meeting "simply exiting from the indigenous industry function would now, however, be seen as a gradual disaggregating of the company".

If this is likely to be the response of the Minister to the proposals, Mr McElligott said, he would prefer that a decision be taken immediately to close the company.