Until 1994, only a relatively small circle of people knew about the passports-for-investments scheme. That was the year a £1.1 million investment in the family firm of the then Taoiseach, Mr Albert Reynolds, became public.

A Palestinian businessman, Mr Sabih Masri, seeking Irish passports for his wife and a son had made the investment in C&D Foods, the Longford company in which the then Taoiseach had a 41 per cent shareholding.

The controversy over the investment made some of the details of the scheme - meant to be a money-spinner for the State - more widely known. A surprised public was told that wealthy foreigners could, in effect, buy Irish passports, if they made substantial investments in the Republic which would save or create jobs.

Even experienced parliamentarians like Bobby Molloy acknowledged being surprised when they first heard about the scheme. He had learned of it a couple of years before the Masri affair, during the 1989-1992 government of Fianna Fail and the Progressive Democrats, when he was Minister for Energy.

Mr Molloy said the scheme was explained to him by the then Taoiseach, Charles Haughey. Mr Haughey told him that any such applications from foreigners wishing to invest in the Republic should be brought to him, Mr Molloy said.

Twice he took foreign businessmen to see Mr Haughey in the then Taoiseach's offices, and Mr Haughey "questioned them rigidly" about their investment intentions, Mr Molloy said. The passports-for-investment scheme was "controlled" by Mr Haughey, Mr Molloy told The Irish Times in 1994.

The Masri affair in 1994 cast some light on the passports scheme, which had operated on an "informal" basis. That year the then justice minister, Mrs Maire Geoghegan-Quinn, was forced to acknowledge that the system had to be put on a formal footing.

She set up new rules and an overseeing committee involving Forbairt - the indigenous investment part of what had been the IDA - and other Government departments, so that the foreign investment cash could be appropriately directed and its employment benefits assessed.

She explained how the scheme had worked. A foreign national would make an approach, through a solicitor or other agent, to the Department of Justice. When the approach was made, a company which wanted to expand, or was in financial difficulty and needed funds, would be identified.

It was "usual" to consult the IDA, but not the practice to insist on a positive recommendation from it. In the end "the judgment as to whether a particular investment was sufficiently attractive in job-creating or job-maintaining terms was a political one, to be exercised by the minister".

Some details of how the Masri money came to be invested in C&D Foods were made public, among them the revelation by the Masri's London lawyer, Mr Fadi Maalouf, that at some stage in the process Mr Masri had had a meeting with Mr Haughey.

Mr Reynolds, himself Taoi seach when the Masri affair became public in 1994, made it clear he had "no hand act or part" in granting the Masris citizenship and said he had not been involved in running C&D for 14 years, since he first became a Minister.

During her explanations to the Dail in June 1994 at the height of the Masri controversy, Ms Geoghegan-Quinn explained that the Department of Justice had been operating according to "informal working rules".

Among these, an investment of about £500,000 would be required per passport, and applicants should demonstrate an intention to reside in the State by buying a residence. She said it was fair to say that to secure an investment Ministers would tend to "exercise discretion in favour of the investor without insisting on all of the certainties that might well be required if a more formal arrangement was in place".

The important thing was securing investment to save or create jobs. She elaborated on this when giving details of the new overseeing committee the following October.

"Under the old scheme there was no requirement to quantify the number of jobs to be saved or created. Under the new scheme there will be a condition whereby the number of jobs retained or created will have to be specifically quantified," she said.

In all the discussion at the time there was no public mention of Leisure Holdings, a company which had started life as a bloodstock investment firm, Leading Sires.

This company enjoyed an investment of several million pounds thanks to the passport-for-investment scheme, even though its major interest at the time was making investments in Britain.

Leading Sires was set up in 1988 to invest in bloodstock. Although not a stock-market company, its shares were occasionally traded by stockbrokers.

The largest single shareholder was Mr John Magnier, who had been appointed to the Seanad the year before by Mr Haughey. The horse-breeder was not known for business activities outside his Coolmore stud and the racing industry, although the Magnier Family Trusts would later emerge as a beneficial shareholder of United Property Holdings, a company at the centre of the controversial deals surrounding Telecom Eireann's purchase of a headquarters site in Ballsbridge, Dublin in 1990.

Mr Magnier and associates invested £2 million in Leading Sires and he took a 20 per cent shareholding. The company, chaired by the Kerry Group chief executive Mr Denis Brosnan, planned to invest £4 million in stallions at Mr Magnier's Coolmore stud.

Leading Sires was showing a profit of more than £560,000 by the end of 1989, and the company - more an investment vehicle than an employer - decided to broaden its horizons. In a letter to shareholders in February 1990 Mr Brosnan said the company, while still investing in stallions, was "already exploring acquisition and investment opportunities" in the leisure sector. A name change to Leisure Holdings was to reflect the change. It was still not a stockmarket company, but in 1990 it was considering seeking a market quotation, and sought publicity in the financial press.

In September and October 1990, two big investments were made. Leisure spent £10.5 million to buy 60 per cent of a group of tennis clubs in Britain, the David Lloyd Clubs, headed by the eponymous former Davis Cup player. It spent a further £1.7 million on a three-quarter share of a hotel in Britain, the Nunsmere Hall country house hotel in Cheshire.

The Leisure directors explained to their shareholders in October 1990 that these two acquisitions "have resulted in a substantial level of borrowings by the company and its subsidiary, Leisure Holdings UK, which at 15th October 1990 were approximately £12.3 million.

"The resultant interest burden would be a major drain on the groups resources and would serve to inhibit the growth and development of the group."

To lighten this £12.3 million debt burden, the company was seeking to raise £10 million by issuing new shares. The move was a success, and £11 million of new investment was raised.

Some £4 million of the funds raised came from an Arab businessman, Sheik Mahfouz, who was seeking Irish passports for himself and several family members at the time.

The passports applications were processed by the then Minister for Justice, Mr Ray Burke.

Sheik Mahfouz was one of the world's richest men, and in return for investment in job-creation projects which was expected to amount to £20 million, 11 passports were processed by Mr Burke.

When the Sunday Business Post first made the connection between the sheik and the Leisure Holdings, Leisure confirmed a "substantial" investment was made, but did not discuss how much.

Apart from the approximately £4 million invested in Leisure Holdings, £3 million went to Kerry Airport, a project also chaired by Mr Brosnan. A further £3 million went to companies run by Mr Noel C. Duggan, the Millstreet entrepreneur. Asked about the investment this week, Mr Duggan's son and fellow director, Mr Thomas Duggan, produced a statement from last year which did not refer to past events, but said the current position was that all Noel C. Duggan's companies were owned by the Duggan family and there were no outside investors or shareholders.

MR Brosnan publicly acknowledged the £3 million airport investment - "a great deal for Kerry Airport", he said. Mr Brosnan and Mr Magnier were not available to comment this week - both were travelling. But Mr Owen McGartoll, chief executive of Leisure, said the company had decided not to comment beyond its initial statement, which confirmed that the Mahfouz investment gave the sheik a "substantial shareholding" in Leisure. Asked about the £4 million, he said he did not want to comment on the scale of the investment, saying the amount of invested by shareholders was a matter for them.

With so much of the sheik's money and other investment in hand, Leisure was in a strong position, compared to the burden of interest on the £12.3 million in borrowings in 1990. It conducted further fundraising, on a smaller scale, to invest further in its new British interests.

By this stage the Leisure Holdings board had been joined by another investor, Mr J.P. McManus. The company's reports showed him holding a one per cent stake.

Like Mr Magnier, Mr McManus was not known for business activities outside the horse-racing business. But in 1993 he would also be linked to the Telecom affair. He was identified by a Government inspector investigating the Telecom site purchase as a key player in the deals surrounding the property, as his account in a Jersey bank part-funded and then profited from the series of deals leading up to Telecom's purchase of the site.

Leisure's move into the David Lloyd tennis centres, in particular, proved a great success. The clubs were tremendously popular, and when the David Lloyd company was floated on the London stock market in early 1993, Leisure Holdings was able to sell off its shareholding - by then 72 per cent - for £36 million. Having spent £14.7 million since 1990 to build up the shareholding in David Lloyd, the sale of the shares for £36 million represented twice the amount invested over the three years. Leisure's major beneficiaries from the deal were its big investors, such as Magnier, whose stake in Leisure had reduced slightly but was still more than 19 per cent, and Sheik Mahfouz, whose investments in the Republic were controlled in Dublin from the accountancy firm, Deloitte & Touche.

Leisure's financial killing on the Lloyd sale more than made up for an £800,000 loss from the eventual sale of the hotel in Cheshire.

Leisure never went ahead with its plans for a stock-market quotation and, as Mr McGartoll pointed out this week, it is a private company and does not have to talk publicly about its business.

A further £3 million in Mahfouz money is believed to have been invested last year in an engineering firm which provided more than 50 jobs - the sort of project for which the passports-for-investment scheme was designed.

How Leisure Holdings' immensely profitable ventures in Britain fit into that scheme, however, remains unclear.

Meanwhile, the passports scheme continues under the new system announced by Ms Geoghegan-Quinn. It remains, as Mr Reynolds put in in 1994, a good scheme, which "promotes investment in this country".