FORMER minister for the marine Frank Fahey has strongly defended establishing the controversial Lost at Sea scheme. The scheme was criticised in a report by Ombudsman and Information Commissioner Emily O'Reilly last year.

The Galway West TD utterly rejected that the scheme, which he established in 2001, was "maladministered".

At an Oireachtas committee yesterday, Mr Fahey also contended that the Ombudsman's investigators misunderstood the scheme during the initial stages of their inquiry. He told the Joint Committee on Agriculture and Fisheries yesterday that the scheme never provided for any monetary compensation. He also said it only applied to families who were still involved in fishing in 2001.

He also rejected allegations by Fine Gael that he set up the scheme to benefit two Aran fishermen who were constituents of his and who were the main beneficiaries of the scheme.

Senator Eugene Regan claimed the scheme had been "rigged" for his two constituents, in that Mr Fahey had used their situations as the argument for setting it up and had also discussed the criteria with the two fishermen.

"You can dress it up as you like. The net point is that this was a scheme designed for your two constituents," Mr Regan said.

Kerry Fine Gael TD Tom Sheahan also said that a ministerial colleague of Mr Fahey had told him it was a good scheme but that it had been hijacked by Mr Fahey.

Mr Fahey rejected the contentions saying he had been subject to "all kinds of scurrilous allegations from Fine Gael and Sinn Féin". He said this was the second occasion Mr Sheahan had abused the privilege of the Oireachtas to make an unfounded allegation against him.

"If you want to name a ministerial colleague [ who made the allegation], name him outside the House," he told Mr Sheahan.

He was "absolutely satisfied" that his handling of the scheme was correct. His Fianna Fáil colleague Bobby Aylward also said it was of deep concern to him that committee members were implying corruption on Mr Fahey's part.

The scheme was aimed at families who had lost vessels at sea but were unable to acquire replacement fishing tonnage.

Sixty-four applications were received, six of which were successful. The basis of the report was a complaint from a Co Donegal family, the Byrnes, who lost family members in a drowning tragedy in 1981. In her report published late last year, Ms O'Reilly found the design and advertising of the scheme had been contrary to fair and sound administration.

The Byrne family only became aware of the scheme in 2003, a year after the closing date.

Ms O'Reilly concluded that the confinement of advertising to the fishing press had excluded applicants such as the Byrnes.

The Ombudsman recommended that €250,000 be paid to the Byrnes but her findings were rejected by the Government.

Mr Fahey argued yesterday that officials from Ms O'Reilly's office had a "fundamental misunderstanding" of the scheme.

It applied to families still engaged in fishing in 2001, he said. On that basis the Byrnes could not have qualified because they had left fishing by 2001. However, Martin Ferris (Sinn Féin) and Andrew Doyle (Fine Gael) said the Byrne family was still involved in fishing in the period around 2001.

Mr Fahey also said the Ombudsman's office believed until 2007 that financial compensation was involved. He had made it a condition of the scheme that the fishing capacity received could not be "sold or otherwise disposed of and that no financial gain should accrue" to successful applicants.

"I cannot and do not accept the findings of the Ombudsman, that the way the scheme was designed was contrary to fair and sound administration," he said.