Mr Michael McDowell was effectively excluded from key negotiations on the amount religious orders would contribute to the State redress scheme for children abused in religious-run institutions, according to the Comptroller & Auditor General.
In June 2002, on the eve of agreeing to the indemnity deal, Mr McDowell, the then attorney general, warned the Government that the religious orders' 128 million contribution might be insufficient.
His concerns were revealed in yesterday's Comptroller & Auditor General's report, which found that the State's potential liability from the redress scheme could be as high as 1 billion.
The exclusion of Mr McDowell, now the Minister for Justice, occurred when the State was accused by the religious orders of leaking information about negotiations to the media, letters released under the Freedom of Information Act show. However, there was no suggestion that any leaks came from Mr McDowell.
According to the C&AG's report, Mr McDowell's office had "no contact" with those negotiating on behalf of the State during a key six-month period, from October 2001. During this time, the then minister for education, Dr Michael Woods, personally agreed to a full indemnity for religious orders in return for a 128 million contribution, two-thirds of it in property.
Last night Dr Woods dismissed the €1 billion figure in the C&AG's report as "a guesstimate". Speaking on RTÉ's Prime Time, he said the C&AG "has made his own sums up". "He can have any estimate he likes."
He said Mr McDowell was kept informed verbally during the six months in question. He said he had word "passed" to the then attorney general to tell him there were "no legal aspects" involved in the negotiations at that stage.
A spokesman for Mr McDowell distanced him from the political decision to agree the deal with the religious orders. "The attorney general doesn't have a policy function in relation to matters coming before the government," he said. The attorney general's role was "solely to provide legal advice in relation to the matters coming before it".
However, he declined to comment on the C&AG's finding on his office's exclusion from negotiations.
According to the C&AG report, contact was finally re-established following three letters from Mr McDowell, the final one in March 2002, warning he could not participate in negotiations or offer legal advice "in the absence of requested information".
A retrospective memorandum on the negotiations was then provided to him. Officials from his office had been centrally involved from early 1999 in the Government's handling of the issue of institutional child abuse.
In June 2002, Mr McDowell warned that estimates of 5,200 claims might be conservative, and consequently that the potential bill might be greater than €500 million.