The Taoiseach has "rejected absolutely" any insinuation that the appeal commissioner in the Charles Haughey tax case acted, because he was his brother-in-law, "with anything less than total professional integrity or competence".

Mr Ahern said: "I have had no contact with him, direct or indirect, about this case. Beyond the general issue known to every member of the public, I have no knowledge of the precise points requiring to be adjudicated upon. The decision came as a complete surprise to me, as it did to everyone else."

Mr Ahern said the slant the Opposition had put on the story was "deeply embarrassing" to himself and it was deeply unfair "that an honourable public servant should be attacked without any opportunity for self-defence and that the privileges of this House should be abused".

Appeal commissioner Mr Ronan Kelly dismissed a tax assessment of £2 million for the former Taoiseach, Mr Haughey.

During the 75-minute session, Mr Ahern said the decision was a total surprise to him and " it is natural that grave concern and deep unhappiness should be expressed at the decision. I did so myself".

But he told deputies he was sure that if Mr Kelly "had any fears about his ability to deal with the case in an absolutely impartial manner he would have declined to sit". He added that if deputies "believe there has been a lapse of standards in the conduct of this case at any level by the relevant authorities, they are profoundly mistaken".

To the best of his knowledge, his brother-in-law was not and had never been a member of Fianna Fail or any other political party and had never worked for them, Mr Ahern said.

He had not been lobbied about the appointment of his brother-inlaw as an appeal commissioner. He asked someone who was competent to do the job and all the correct procedures and due process were followed.

He said Mr Kelly's name and that of Mr John O'Callaghan, the second appeal commissioner, were laid before the House on January 8th, 1993 and any deputy could have raised questions about the appointments.

When the Fine Gael leader, Mr John Bruton, asked why he did not wait to make the appointments until the formation of the new government that January, Mr Ahern said there was an enormous amount of work at that time when there were four commissioners and now there were only two.

Mr Ahern said his brother-in-law had 25 years' experience as a chartered accountant, holding senior positions, and was "eminently well qualified" for the position. Mr Ahern's relationship with Mr Kelly was referred to in the Sunday Tribune in January 1993 and there was a parliamentary question about the criteria for appointment in March.

"There has been ample opportunity long before now for anyone who had difficulties or reservations about the appointment, or about the manner in which he has adjudicated on literally hundreds of cases since then, to do so."

The Minister for Finance, Mr McCreevy, repeated that he regarded tax evasion with abhorrence, and that the Minister for Finance did not get involved in the question of tax liability.

Mr Bruton challenged the decision of the appeal commissioner. "Not only was it wrong, but it was contrary to the understanding of the deputies in this House in 1975 when they passed the legislation."

He said the arguments advanced in media reports to justify the decision were that the gift was made to Mr Haughey by a company outside the jurisdiction and the actual shareholders in that company could not be identified.

"I believe that in both cases the appeal commissioner can be demonstrated to have acted in a fashion that is contrary to the understanding of the House at the time when it passed the legislation."

Labour leader Mr Ruairi Quinn said the debate was a test of how much progress had been made in the past few years. "A test of the Taoiseach and his new model Fianna Fail."

He added: "So far, Taoiseach, you have failed. Failed to understand the absolute outrage that is out there amongst the public. A public which believes now more than ever that there is one law for the rich and one for everybody else. A public which believes the golden circle is not dead, but is not only alive but thriving.

"And Taoiseach, you are the only leader of Fianna Fail the public has given the benefit of the doubt since Mr Haughey took out Jack Lynch in 1979."

Mr Quinn said a former leader of Fianna Fail, a former Taoiseach, Mr Ahern's mentor, was making a fool of the institutions of the State and the people he once claimed to serve, with the active support of the party.

Mr Pat Rabbitte (DL, Dublin South West) said that while the appeal commissioner was a quasijudicial office, it operated in total secrecy in breach of the principles set out in Article 34 of the Constitution that the "law shall be administered in public". Not only did they operate in camera, but no information was generally available about their decisions. Mr John Gormley (Green Party, Dublin South East) asked why Mr Haughey's portrait was still hanging in Leinster House after all the scandals and disgrace. At the very least, it should be put down in the basement where it belonged, he added.

Mr Joe Higgins (Socialist Party, Dublin West) said the Ireland of the golden circle had used, abused and sucked dry the Ireland of the majority of tax-compliant citizens. "I think it is high time that our people called an end to this and pulled down the corrupt edifice."