The Minister for the Environment told the tribunal yesterday he never met Mr Michael Bailey at the behest of the Taoiseach, nor was it ever suggested to him by anyone that he should do so.
The appearance of Mr Dempsey specifically to deny the charge led to some exchanges between Mr Justice Flood and Mr Garrett Cooney SC, for the Murphy group, on whether Mr Cooney should acknowledge an error had been made.
The Minister arrived at the tribunal shortly after noon after counsel for the tribunal, Mr John Gallagher SC, had contacted him at the Department early yesterday.
Mr Gallagher contacted him in response to an assertion that he (Mr Dempsey) had interviewed Mr Bailey in advance of the formation of the Government in 1997. The purpose of the contact was alleged to have been to ascertain the truth of rumours about payments to Mr Ray Burke, which might affect Mr Burke's suitability for office.
On Wednesday, Mr Cooney said it would be Mr Joe Murphy jnr's evidence that Mr Dempsey's involvement was told to him by another Cabinet member, Mr Dermot Ahern.
Mr Ahern on Wednesday said he had never heard such a thing before and consequently could not have said it to Mr Murphy jnr.
Mr Gallagher told Mr Justice Flood this denial had been supported by Mr Dempsey during their phone call yesterday and Mr Dempsey had indicated that he would appreciate an opportunity to put his refutation on the record.
Mr Justice Flood agreed to an interruption in the taking of the evidence of Mr Frank Connolly to hear the Minister.
On taking the witness stand, Mr Dempsey said the allegation "came as a total surprise to me, I hadn't heard of it before and had no intimation before".
During cross-examination by Mr Cooney he agreed that if the Fianna Fail leader had asked him to interview Mr Bailey, he "would have no difficulty with it". However, the Taoiseach had not asked him, nor was it ever intimated to him.
When Mr Dempsey questioned the relevance of the hypothetical question, Mr Justice Flood told Mr Cooney "It would appear that you are in error".
Mr Cooney then put forward the possibility that Mr Bertie Ahern could have told Mr Dermot Ahern that Mr Dempsey was being asked to interview Mr Bailey, but then changed his mind. If it was a mistake, "it was", he said, "a mistake of no significance".
Mr Dempsey then objected, saying "it is very significant for me to have my name all over the news yesterday". Mr Cooney said he was addressing the chairman and must not be interrupted by the witness "no matter how distinguished he is".
When the Mr Justice Flood invited Mr Cooney to accept that an error had been made, Mr Cooney said "now please Mr Chairman, there is no need to address me in those tones", before adding that he would have to take instructions from his client about the matter. He said that the account was his client's recollection of what had been told to him by Mr Dermot Ahern.
