The origins of the passports-for-sale scheme lie in a trip to Asia in 1986 by a trade delegation that included the then minister for industry and commerce, Mr John Bruton. On his return Mr Bruton raised the idea of such a scheme to attract investment from abroad. Correspondence took place between Mr Bruton's Department and the Department of Justice, but no decision was taken.

However, the idea for the scheme was reactivated by Charles Haughey who was returned to power in February 1987. Guidelines for the scheme were discussed at cabinet in 1988. The Department of Justice, which was to operate the scheme, was against the idea, believing that Irish citizenship was something that should be earned in the "normal" way and not something that it should be possible to buy. Gerry Collins was Mr Haughey's minister for justice at the time.

Despite the objections, Mr Haughey decided to put the scheme in place. No legislation or regulation was required, and the establishment of the scheme was not made public. Word began to spread among senior business figures and legal and accountancy firms with connections around the globe.

A provision in the Naturalisation and Citizenship Act, 1986, allowed for the creation of the scheme. Under the provision a minister for justice could waive normal conditions and grant citizenship to a person who had "Irish associations". Normally a person would have to be living here for five years before qualifying for naturalisation.

The core provision of a "statement of intent" drawn up by the Haughey government and defining "Irish associations" read: "The Minister [for Justice] will be satisfied, on the advice of a Minister of the Government, that the applicant has established a manufacturing or international services or other acceptable wealth and job-creating project here that is viable and involves a substantial investment by the applicant."

The other conditions were that the applicant must have a "residence" here and must be of good character.

The size of the investment required at the time is understood to have been £500,000. The spouse and children of an investor would also be issued with passports for this amount.

The first passports under the scheme were issued to a number of Chinese and Hong Kong nationals in December 1988. The investors were behind the establishment of the Shamrock apparel factory which employed hundreds of people in Santry, north Dublin, for a number of years before eventually going into liquidation.

Following the 1989 general election and the creation of the 1989 FF/PD coalition, at least one of the new ministers was told by Mr Haughey that applications for citizenship that came his way should be referred to his office.

Bobby Molloy told The Irish Times in 1994 of Mr Haughey telling him to bring any foreigners wishing to avail of the scheme to him. Mr Molloy, who had not known of the scheme's existence before this and was surprised to learn about it, said the scheme was "controlled" by Mr Haughey.

Mr Molloy would not comment on the issue this week.

Other sources can throw no light on this claim by Mr Molloy. There was a senior IDA figure in Mr Haughey's office in those years, working on investment projects which would create or maintain jobs. Unemployment was a major issue, and Mr Haughey was very interested in potential job-creating projects.

After the establishment of the FF/PD coalition Ray Burke was appointed minister for justice. Last January a spokesman for Fianna Fail said Mr Burke, as minister for justice, had signed naturalisation forms for 11 Saudi Arabian and Pakistani nationals in December 1990 after receiving a recommendation from Mr Haughey's office.

"I understand that the recommendation would have come from the Taoiseach's office. That was the procedure at the time," the spokesman said.

These were the Mahfouz passports, the circumstances surrounding the issuing of which contributed to the ending of Mr Burke's political career this week when disclosed in last Saturday's Irish Times.

Mr Burke signed the naturalisation certificates in his home on a Saturday, and passports were handed over to the Mahfouz party in Dublin the following day, reportedly by Mr Haughey. No investment had been made at the time the passports were handed over, although a commitment to invest £20 million had been made.

At the time the general public knew nothing about this. The existence of the scheme only became generally known in 1994 when it was revealed that a wealthy Saudi Arabian businessman, Khalid Sabih Masri, had two years earlier invested £1.1 million in C & D Pet Foods, the company owned by the family of Albert Reynolds. The investment was part of a citizenship application from Mr Masri on behalf of some members of his family. Mr Reynolds was Taoiseach at the time of the disclosure.

Mr Reynolds said he had "no hand, act or part" in the affair. Mr Dick Spring, the then Tanaiste and minister for foreign affairs, said there was nothing unethical about the deal. He announced that new tough legislation would be put in place to cover the scheme.

The Masri application was represented by a Roscommon-based architect, Brian O'Carroll, who has acted as agent for a number of foreign nationals since 1988. An investor once suggested to him that he, the investor, give a financial contribution or gift to a politician. "I just said don't even try," Mr O'Carroll said. The matter went no further. "I suppose most foreigners would feel obliged to do that but it never happened, as far as I know anyway." The investor concerned made a £500,000 investment and was naturalised.

In October 1994 the then minister for justice, Maire Geoghegan-Quinn, announced the setting up of a committee of representatives from a number of government departments and Forbairt which would vet investment suggestions and make recommendations. She also announced that the new limit would be £1 million per person to be naturalised and that there must be audited confirmation of the investment from an established firm. The scheme would be put on a statutory basis, she said.

The promise to introduce legislation was repeated by the minister for justice in the Fine Gael/ Labour government, Nora Owen, in January 1995, when there was controversy over the granting of citizenship to two US millionaires, Mr Kenneth and Mr Robert Dart. Approval to draft legislation was agreed by cabinet.

However, a specific legislative basis for the scheme has never been put in place. Since 1988 143 persons have been naturalised under the scheme, 50 of whom were spouses or children. The total number of persons naturalised during the same period would be approximately 3,000. Investment worth £90 million has been attracted here as a result of the scheme. No new applications are currently being accepted pending completion of a comprehensive review of the scheme. The government has given indications that the scheme may soon be scrapped.