The former Taoiseach, Mr Charles Haughey, had outstanding loans for more than £15,000 with Patrick Gallagher's Merchant Banking Ltd when it collapsed in 1982. Mr Haughey's name and that of a company, Larchfield Securities, which owned Mr Haughey's island, Inniskvickillaune and other Haughey properties, were listed in a liquidator's report to the High Court following the collapse.
It is understood the liquidator noted in his report that some of the bank's loans were in fact gifts and that it was not expected they would be repaid. The report does not specifically list Mr Haughey's loans as falling within this category.
The leader of the Labour Party, Mr Dick Spring, raised the matter in 1990 in a letter he handed to Mr Haughey after these matters had come to his attention.
Mr Haughey replied, in a short note dated March 1990: "Dear Deputy, I read your letter yesterday with disbelief. I categorically reject your outrageous suggestions and find it deeply offensive that you would write to me in this tone. Yours, Charlie Haughey, Taoiseach."
The matter was covered in an RTE report on Mr Gallagher due to be broadcast in October 1990. However, the report was subsequently re-edited and the references to Mr Haughey removed.
It is understood Mr Haughey may have paid back the loans subsequent to the drafting of the liquidator's report.
A spokeswoman at Mr Haughey's office in Kinsealy yesterday said Mr Haughey would not be commenting on the matter.
When Merchant Banking collapsed, some 590 small investors were owed £1.3 million. Mr Gallagher, who was a director of the bank, was jailed by a Belfast court for two years in October 1990.
The charges were theft and the furnishing of false information in relation to Merchant Banking (NI) Ltd. He served 12 months. No charges were brought against him in the Republic.
Merchant Banking was part of a 45-company banking and property empire which collapsed in 1982. The group was headed by a Cayman Islands-based holding company, Bering Estates Ltd.
Mr Gallagher was the leading beneficiary of Bering Estates.
The company's registered offices were at the Bank of Nova Scotia Trust Company (Cayman) Ltd, PO Box 501 Georgetown, Cayman.
Bering Estates was set up in 1972 when Mr Gallagher's father, Mr Matt Gallagher, was at the head of the company.
The Bank of Nova Scotia on the Cayman Islands was mentioned last week during the Dunnes payments to politicians tribunal.
Mr John Furze and Mr John Collins were employees at the Bank of Nova Scotia who ran the Guinness Mahon Cayman Trust from 1971 to 1973.
Guinness Mahon Cayman Trust was a "B" licence bank set up on the Cayman Islands by Mr Des Traynor in 1971. The bank was owned by the Guinness & Mahon bank in Ireland.
When it received its "A" licence in 1974 and began trading, Mr Furze and Mr Collins, who had left the Bank of Nova Scotia some months earlier, took over as joint managing directors. Mr Traynor was chairman of the bank.
