Fine Gael faces major political embarrassment after admitting giving £120,000 in illegal under-the-counter cash payments to its staff over a nine year period.
The party leader Mr Michael Noonan revealed details of the payments at Leinster House last night in response to a series of press queries on the matter in recent days.
Fine Gael paid £111,110 to the Revenue in 1999 in respect of unpaid PAYE and PRSI, interest and penalties arising from the payments. However the Revenue Commissioners may yet seek to impose further penalties, although Fine Gael insists it has made a full and final settlement.
The cash payments were made in respect of staff overtime, Christmas bonuses and payments to temporary workers.
Mr Noonan said last night the practice was stopped by former Fine Gael General Secretary Mr Jim Miley shortly after he was appointed to that position in 1995. However, a former Fine Gael staff member said last night that he had received a significant cash payment in 1997 in respect of work done during the general election campaign of that year.
Mr Noonan claimed the party disclosed the payments voluntarily to the Revenue Commissioners in 1999. However, in a statement the party admitted that the Revenue Commissioners dispute this, and say they had begun to investigate Fine Gael before the party revealed the payments.
The party also revealed that it had received £90,000 worth of "pick-me-up" payments from supporters in 1989, 1994 and 1995.
This is the mechanism whereby goods and services are supplied to political parties but are paid for by party supporters or their companies. The companies can then claim these payments as business expenses, although this practice is illegal.
Fine Gael revealed details of these payments to the Revenue in July 1998 after the Revenue had told the party it was investigating the matter. Other political parties have had similar contact with the Revenue Commissioners in relation to the operation of this system.
The news of the illegal cash payments represents the second major financial embarrassment from the recent past to hit Mr Noonan since he became party leader in February. In March it emerged that a company with a 40 per cent stake in Esat had given Fine Gael $50,000 within three months of Fine Gael Minister Mr Michael Lowry's award of the State's second mobile phone licence to Esat.