THE chief executive of Coillte, the State Forestry Company, yesterday told a Dail committee that the company was not supporting the black economy.

Coillte chief executive Mr Martin Lowery told the Oireachtas Committee on Commercial State Sponsored Bodies that serious allegations made at an earlier committee hearing were absolutely untrue and without foundation.

Coillte meticulously complied with all legal requirements with regard to obtaining C2 certificates or the deduction of 35 per cent from payments to contractors under the 1970 Finance Act and the extension of these procedures to sub contractors in accordance with the 1995 Act, he said.

Coillte also provided ongoing information to the Department of Social Welfare on all contractors employed. The company did not have the right to investigate the tax affairs of its customers.

Mr Lowery said the Irish Farmers Association's contention that the CAP Reform Forestry incentive be re-balanced in favour of farm forestry was totally unjustified.

Coillte's activities were spread throughout the country bringing employment and increased economic activity to rural areas, he said.

"Meddling with the scheme in their favour would make afforestation by forestry companies uncompetitive and result in Coillte ceasing to afforest new land with the result that there would be a substantial reduction in the national afforestation programme, a loss of up to 1,000 jobs in direct and indirect employment and a reduction of £25 million investment in the rural economy," Mr Lowery said.

The company had increased indirect employment - forestry contractors - from a few hundred eight years ago to over 2,000 now, he said.