Taoiseach Enda Kenny has claimed the Fianna Fáil leader is asking him to "break the law", in a row over the privilege of documents linked to the inquiry into Irish Bank Resolution Corporation (IBRC) sales.

During heated Dáil exchanges Micheál Martin accused the Taoiseach of operating "Chinese walls" over controversial sales, that included the purchase of water services company Siteserv by businessman Denis O'Brien and involved a €119 million debt write-off at taxpayers' expense.

Mr Martin asked Mr Kenny when Department of Finance officials and the Minister for Finance knew about the concerns raised by Mr Justice Brian Cregan. The judge warned in a letter last week to the Taoiseach that his inquiry would face successful legal challenges if it attempted to use confidential banking information held by the special liquidator KPMG and by the department.

‘Thoroughly embarrassed’

Mr Martin also asked if the Taoiseach was “thoroughly embarrassed” by the decision to ask KPMG to investigate since it was now “the main obstacle in the progression of the investigation”.

Mr Kenny said he was “not entitled or authorised by law to investigate, comment or hold discussions with the department”.

The Fianna Fáil leader said it was “inconceivable” that the department could claim confidentiality “without the issue being discussed by the Government and without a wider knowledge that the issue was a problem three months ago, not last Thursday”.

“You can talk all you like about Chinese walls but I am prohibited by law from inquiring about it,” said Mr Kenny. He claimed Mr Martin was suggesting “I should deliberately break the law in respect of the Commission of Investigation Act”.