A Pakistani bank of which the Fianna Fail TD, Mr John Ellis, was a non-executive director, is being investigated for alleged corruption and mismanagement of affairs.
A spokesman for the National Accountability Bureau (NAB) in Karachi has confirmed to The Irish Times that a full investigation into the activities of the Indus Bank Ltd is under way after it was wound up on the orders of the High Court.
The chairman of the bank, Mr Khursheed Sohail, has been questioned by the NAB and is understood to have filed a plea bargain application.
Mr Sohail is a business acquaintance of Mr Ellis and appointed the Sligo-Leitrim TD and his wife, Patricia, as non-executive directors of the Indus Bank in the early 1990s. The couple resigned their directorships last August.
Mr Ellis's connection with the bank was raised in the Dail last October by the Fine Gael TD, Mr Jim O'Keeffe, when he called on the Department of Foreign Affairs to investigate the appointment of Mr Hasib Ahsan as Ireland's honorary consul to Pakistan.
It had emerged that Mr Ahsan, who had been recommended for the position to the Department of Foreign Affairs by Mr Ellis, had overcharged applicants for visas to Ireland between June and August last year. The total amount overcharged, involving 120 visa applications, was £3,000.
However, the Department said last October that the fault was due to an administrative error and there was no net gain to the honorary consul. It said the consular service in Karachi was "operating satisfactorily" and there was no cause for concern.
In the Dail Mr O Keeffe said Mr Ahsan was a friend of the Indus Bank chairman, Mr Sohail, and that Mr Ellis lobbied for him to get the job.
After the matter was raised in the Dail Mr Ellis confirmed he had been invited by Mr Sohail to become a director of the bank eight years ago. He said he knew him through business in the UK. He said he and his wife had agreed to become non-executive directors.
Mr Ellis said he never received any money in return for the position and never gained a penny from the bank. He said he resigned as director in August because he did not "have the time or energy" to continue.
He confirmed that he recommended Mr Ahsan for the position of honorary consul to Pakistan after being asked to do to so by a number of members of the Pakistani community in Ireland.
The bank had its licence cancelled by the State Bank of Pakistan last September, a month after Mr Ellis said he and his wife had resigned as non-executive directors. Among the reasons cited for the licence cancellation by the State Bank was "mismanagement of the affairs" of the bank and the "misuse of the position by the directors concerned for their own benefit".
In February the Peshawar High Court ordered the winding up and liquidation of the bank. All transactions were stopped and accounts were frozen.
Last month Pakistani media reported that account holders threatened to go on hunger strike unless the government allowed their accounts to be unfrozen. Many small and medium-size companies claimed that the situation has resulted in an acute shortage of working capital.
The NAB spokesman said the investigation into the bank's activities was likely to take some time. He refused to say whether former directors or former non-executive directors would be questioned as part of the inquiry.
Two years ago it emerged in the Moriarty tribunal that Mr Ellis was paid £26,000 in cash by Mr Charles Haughey from the Fianna Fail party leader's allowance in 1989 and 1990 to rescue him from the threat of bankruptcy.
A meat company of which Mr Ellis and two of his brothers were directors went bankrupt in the early 1990s, leaving west of Ireland farmers owed thousands of pounds.
A campaign to get their money back was launched by farmers when it emerged that Mr Ellis had a £263,000 debt at National Irish Bank written off for a payment of £20,000 in 1991, and that Mr Haughey had paid some of Mr Ellis's debts.
The controversy forced Mr Ellis to resign as chairman if the Oireachtas Joint Committee on Agriculture.