Political opponents and sections of the media were blamed by the Taoiseach, Mr Ahern, for Mr Ray Burke's resignation as a Minister and a TD. "I believe he resigned both as the strongest protest that he could make at the shameful treatment to which he has been subjected by certain parties in this House and by certain sections of the media who cynically regard politics as a blood sport."

Mr Ahern was speaking during the debate on the new ministerial appointments - the transfer of Mr David Andrews from Defence to Foreign Affairs, and Mr Michael Smith's promotion to Defence. Mr Smith's nomination to the Cabinet was approved by the Dail by 76 votes to 65. Mr Ahern also announced that he would be recommending to the Government that the Galway East deputy, Mr Noel Treacy, be appointed Minister of State at the Departments of Education and Science and of Enterprise, Trade and Employment.

He said Fine Gael's deputy leader, Mrs Nora Owen, had complained that the Opposition was roundly criticised for "not going for the kill," and not claiming all sorts of wrongdoing, adding that it was not aware of any wrongdoing.

"I praise her for saying that, though it would have had more effect on her colleague from north Dublin if she had said it earlier. Even the former Tanaiste and Labour party leader, Deputy Dick Spring, complained last Sunday about the relentless political blood-lust of some of the media."

But some members of the House were not exempt from the same fault, said the Taoiseach. A senior Fine Gael frontbencher once boasted that "heads in baskets" was what politics was all about.

"That is not how I have ever regarded politics, which I understand to be about public service. That is not how Fianna Fail regained office either on this occasion or any other occasion."

He added: "I reject completely Deputy Bruton's accusation that my knowledge of certain matters in any way makes me responsible for the events which led to the resignation of Deputy Ray Burke. I appointed Deputy Burke after careful consideration in the firm belief that he had done nothing wrong, and that he had earned the Foreign Affairs portfolio.

"Accepting an unsolicited gift of £30,000, of which less than half was retained for his personal campaign, was certainly imprudent. But a few weeks ago in this House, almost no one considered it a hanging offence. I was not aware of the letter written within three days of the contribution, which has been referred to the new inquiry. It has yet to be shown that the letter, which is open to an entirely innocent construction, has any connection with the payment.

"Deputy Bruton defended the known wrongdoing of one of his Ministers simply because his misdeed predated his appointment to ministerial office. Yet he expects me to prejudge somebody, where there was and is no established wrongdoing and not to appoint him. This is typical of Deputy Bruton's hypocrisy.

"He nobly talks about the principles of natural justice but ignores them in practice, and called for Deputy Ray Burke's resignation before there was any evidence of wrongdoing, as Deputy Nora Owen has rightly pointed out, even if too late. Deputy Burke's political career was ended by Deputy Bruton and his likes, not by me.

"I hope he is proud of his handiwork, and that he never comes to a similar untimely political end, and that all his actions as a government member would survive the same intense scrutiny as Deputy Ray Burke's.

"As leader of the opposition, I never liked to demand anyone's resignation before the facts were established and before people were given a fair chance to defend themselves. I tried to bring some humanity and decency into political relations across the floor of the House.

"That more dignified approach was appreciated by the Irish people. I am sorry that some of the Opposition benches are occupied by people less scrupulous in the pursuit of their ambition, and who do not mind whose careers they bury along the way."

On the passports controversy, Mr Ahern said that the Mahfouz family, who were the investors in the case, had expressed grave concern about the publicity which surrounded their dealings with the State and had been assured by the Department of Justice, following contacts in 1996, that "we will continue to maintain confidentiality in relation to any contacts you may have with us."

However, Mr Ahern added, in view of the fact that a highly sensitive report in the case had already been leaked to the media in pursuit of a political agenda, and that the circumstances generally were quite exceptional, he believed that it was in order for him at least to provide clarification concerning his own contacts with Mr Burke and others on the subject.

He said that Mr Burke's involvement in the issuing of passports to Sheikh Mahfouz was brought to his attention by Mrs Maire Geoghegan-Quinn, then Minister for Justice, on November 30th 1994. She had given him the details orally and followed up at his request with a note headed "Secret - Mahfouz and Others."

Insofar as Mr Burke was concerned, this note had indicated that the "naturalisation certificates were signed personally by the then Minister and dated December 8th 1990. This was a Saturday. The normal procedure is that these certificates are signed by an official at A/Secretary rank - acting on the delegated authority of the Minister for Justice. The certificates actually include a reference to this. In these cases, this was crossed out and initialled by the then Minister.

"Normally, naturalisation certificates are only signed by the Minister if there is a `celebrity' interest in them - for example, the late Sidney Nolan."

However, he said, it was wrong to infer that Mr Burke had decided to set the normal practice aside, insofar as the signature was concerned. A perusal of the file showed that the formal Departmental note, which Mr Burke read on that Saturday evening, stated: "Normally these could be signed by somebody authorised on your behalf but I have left them for your personal signature."

The Taoiseach said the Departmental advice note from the secretary certainly did not convey any suggestion that signatures by a Minister was something of an exception - quite the contrary.

Mrs Geoghegan-Quinn had briefed him on the case on November 30th, 1994, because it was believed he would become Taoiseach in a matter of days. "As is now known, that did not happen, not least through the influence of another so-called new story which appeared in a newspaper with the intention of frustrating the formation of a government.

"While the detailed procedures normally followed in the issuing of passports under the naturalisation-based investment scheme were not followed in this case, an examination of the file now makes it clear that no evidence or allegation of wrongdoing was made in relation to Ray Burke."

Mr Ahern said that the next contact with the issue that he could recall was reading an article in the Sunday Business Post on December 31st 1995, which quoted government sources confirming that the manner in which the passports were granted was "very loose", although there was no evidence of any impropriety by the individuals involved. The sources could not confirm when the inquiry would be completed and were awaiting a reply from the sheikh's solicitors.

There was further reference to the issues raised in other media reports early in 1996, and he recalled discussing them with Mrs Geoghegan-Quinn on possibly two further occasions.

"When forming the present Government, I discussed some issues with Deputy Ray Burke of which the issuing of these passports was one. He told me that he believed that, given the proposed substantial investment available, the issuing of passports in the Mahfouz case was reasonable, while accepting that the normal procedures in relation to the processing of the application should have been followed.

"He said that he had returned from abroad just before the issue of signing the naturalisation certificates arose, and in doing so, he had followed a note from the then secretary of his Department. He did not accede to a request to meet the Mahfouz family representatives and had referred them to officials. He further said he would have no problem with any investigation the Government might undertake into the naturalisation-based investment scheme.

"After the Government was formed in late June, I discussed a number of items of concern with the present secretary-general of my Department. In relation to the current case, I asked him to speak to the present secretary-general of the Department of Justice, Equality and Law Reform and to ask for a report on the circumstances of the case.

"That discussion took place, and the report I received from the secretary-general of my Department was based on an updated version of the report prepared in the Department of Justice in 1995. It essentially summarised the facts in relation to the handling of the Mahfouz case that I have presented here today.

"Shortly afterwards the Tanaiste and I discussed the case and I informed her of the facts of the case. The Tanaiste and I have now reviewed in full all the facts of the case as they are contained in the Department of Justice file on the matter."

Mr Ahern said that on foot of that he believed it correct to refer to the fact that in a Government "early warning" report of February 1995 (a system of signalling potential sources of controversy in good time) the then Minister for Justice, Mrs Owen, drew the then Taoiseach's attention to: "Investigation of the granting of citizenship in a certain case in which the speed of decision, lack of documentation, faulty procedures give cause for concern. Interim report submitted."

The "early warning" report stated: "Following interim report, details of investment made have been sought and are awaited."

There was still, said Mr Ahern, an element of uncertainty as to the sum actually invested in the Mahfouz case, and he had no difficulty in having it or any other aspect of the matter further examined.

"I note that former Minister Nora Owen has confirmed that, in her view, there was no evidence of wrongdoing. It is a great pity that she did not communicate this to her party leader before he started baying for the Minister's blood and indeed my own, because I knew about it. I take great care to investigate matters carefully before passing political judgment. Deputy Bruton does not."

In summary, said Mr Ahern, the Mahfouz case was one in which the normal procedures should have been followed. "Equally, I have not been provided with any evidence which suggests wrongdoing on Deputy Ray Burke's part in relation to the case, and nothing I have seen or heard so far either inside or outside this House contradicts this view."

The Government is reviewing the passports-for-sale scheme, the Taoiseach said. Mr Ahern was replying to Mr Pat Rabbitte (DL, Dublin South West) who asked if it was the intention of the Government to scrap the scheme. The matter was first raised by Mr Trevor Sargent (Green Party, Dublin North) who asked if legislation was to be amended to end the selling of passports.

Mr Ahern said there was no legislation in existence.