The Government tried to show support for Mrs Jean Kennedy Smith during an investigation for an alleged conflict of interest when she was US Ambassador to Ireland.
On Friday Mrs Kennedy Smith agreed to pay $5,000 as a "settlement" for what is seen as a technical breach of conflict of interest regulations.
In 1998 Mrs Kennedy Smith wrote to the Taoiseach on US Department of State notepaper seeking a Government grant of $1 million for the Ireland Arts Festival at the Kennedy Center in Washington. At the time she was both US Ambassador to Ireland and a member of the board of trustees of the Kennedy Center.
Mrs Kennedy Smith denies violating the law, saying she believed what she did was "absolutely proper". She said she settled the case, brought by the US justice department's pubic integrity unit, "to resolve what could be a distracting and time-consuming proceeding".
The investigation was carried out over the past year, during which time the Government frequently expressed full support for Mrs Kennedy Smith in mounting the festival. Following her letter, the Government contributed $1 million to the festival. The British government also contributed as the festival had an all-Ireland character.
The Taoiseach, Mr Ahern, attended an event at the Kennedy Center last St Patrick's Day to highlight the festival. The President, Mrs McAleese, attended the opening of the festival in May. Both warmly praised Mrs Kennedy Smith for her role in conceiving the festival. The Kennedy Center paid tribute to Mrs Kennedy Smith after the announcement that she had resolved the matter by payment of the fine, while insisting she had not violated federal law.
The centre in a statement said the festival was "both a glorious celebration of the cultural heritage of Ireland and a unique opportunity for Irish artists to share their magnificent talents with American audiences. Jean Kennedy Smith has worked skilfully and effectively to bring the arts into people's lives and to use the arts to bring people of different cultures together. We are enormously grateful for her work as a trustee of the Kennedy Center and her commitment to the arts."
The US Department of Justice confirmed yesterday that its public integrity unit had been responsible for the "prosecution" of the case following the investigation by the State Department. "It was very simple," a spokesman said. "The evidence showed there was a conflict of interest."
Observers in Washington point out that relations between Mrs Kennedy Smith and the State Department were sometimes turbulent during her term in Dublin as the career diplomats resented her way of dealing with the Northern Ireland situation. It was not surprising that her letter to the Taoiseach attracted the attention of the "invigilators" at the State Department who would have then made a formal complaint that she had breached the conflict of interest rules.