Harney to initiate investigation into how confidential files became public

The Tanaiste, Ms Harney, will initiate an investigation today into how hundreds of confidential and embarrassing files, detailing substantial payments from donors to the Progressive Democrats, came into the public arena.

She has publicly apologised for the "obvious embarrassment caused to the various donors" while acknowledging that the trust of those who had contributed on a confidential basis to the party had been breached.

Though party sources would not accept formally that a box of confidential files had been dumped in a skip outside PD headquarters in Dublin's South Frederick Street, one insider told The Irish Times that "there was a clear-out at head office last weekend".

The publication of financial files from 1987 to 1992 in yesterday's Sunday Business Post will add to the PDs' problems in the Dail this week, when the Minister of State, Mr Bobby Molloy, will be pursued by Fine Gael on his u-turn in relation to the building of 26 houses adjacent to the home of the PD chairman, Senator Jim Gibbons, in Carlow.

The Labour Party spokesman, Mr Tommy Broughan, called last night for a Garda and Revenue Commissioners investigation on the timing of payments to the PDs and any political decisions made by them in government. The Green Party claimed last night that the PDs were now "a sleazy party in the gutter whose main aim is to assist its benefactors while in government".

A £12,000 Smurfit Group payment to the PDs, drawn on an offshore bank account in Jersey, was among the documentation which the Sunday Business Post says was found in a skip outside PD headquarters. There are details also of a separate £30,000 donation by Smurfit Group Services.

A letter sent by Mr Paul Smithwick, prominent solicitor and party fund-raiser, to Mr Des O'Malley, then Minister for Industry and Commerce, dated March 2nd, 1992, refers to a "confidential meeting" between Dr Michael Smurfit and the PD leader in January of that year. A copy of a cheque donation of £30,000 to the party from Smurfit Group Services is enclosed with the letter. Mr Smithwick said: "Michael will prove to be an extremely good supporter of the party and I cannot tell you how appreciative he was of our confidential meeting in January."

A spokeswoman for the Smurfit Group said last night that there was no significance in a cheque being drawn on a foreign account since the company, being international, had accounts in many countries. She could not recollect what the meeting with Mr O`Malley was about.

The files also detail payments of £20,000 by Mr Larry Goodman in 1987, which were disclosed to the Tribunal of Inquiry into the Beef Processing Industry. Payments were made by Mr Peter McAleer, brother-in-law of Mr O'Malley, and £10,000 was donated by his company, Tara Mines, in 1987.

Ms Harney said in Clonmel yesterday that it was clearly very embarrassing for the PDs that private financial information and the private correspondence of Mr O'Malley should end up in a Sunday newspaper.

Analysis: Geraldine Kennedy;