The Taoiseach accepts he misled the Tanaiste, Ms Harney, about the appointment of Mr John O'Callaghan as appeal commissioner in 1992.
He has confirmed that he informed his Coalition partner on Wednesday that Mr O'Callaghan, who was appointed at the same time as his brother-in-law, Mr Ronan Kelly, was a Labour nominee given to him by Mr Dick Spring.
He accepted last night, however, that this was not the case.
When the controversy surrounding Mr Kelly's reduction of Mr Charles Haughey's tax liability to zero erupted on Wednesday morning, Mr Ahern said that since the two appointments were laid before the Oireachtas on January 8th, 1993, he assumed that while Mr Kelly was his nominee, Mr O'Callaghan was the Labour nominee.
He had worked as a tax consultant with Farrell Grant and Sparks, chartered accountants. The negotiations on the Fianna Fail/Labour Coalition were well advanced at that time.
After his meeting with Ms Harney, Mr Ahern looked up the files and discovered that the two appointments were actually made on December 9th, 1992.
He checked with officials and confirmed that the negotiations with Labour had not even begun at that stage. Sources close to Mr Spring said last night that he had no hand, act or part in the appointment of Mr O'Callaghan. The first meeting between Mr Spring and Mr Albert Reynolds took place on December 13th, 1993, and the negotiating teams met subsequent to that.
Though no attempt was made to correct the information given by Mr Ahern to Ms Harney until the media raised queries about it last evening, Government sources for both parties say the matter is "not an issue".
In a special debate in the Dail before its Christmas adjournment yesterday, the Taoiseach said it would be very wrong to jump to conclusions at an intermediate stage of any particular process.
In what was generally described as an "under-performance", Mr Ahern stated he had had no contact with Mr Kelly "direct or indirect about this case".
"The slant or construction that the Opposition have put on the story has been deeply embarrassing to me, but I reject absolutely the insinuation that the appeal commissioner, because he happens to be my brother-in-law, not particularly close to me, has acted with anything less than total professional integrity or competence in this matter.
"To the best of my knowledge, he is not a member of Fianna Fail or any other political party," Mr Ahern stated.
The Opposition parties, meanwhile, were roundly critical of the Taoiseach, of Mr Haughey and of the tax authorities during the debate.
The Fine Gael spokesman, Mr Michael Noonan, said that in 25 years of public life, he had never experienced such outrage among taxpayers. He called for Mr Kelly's ruling and the arguments which led to his conclusions to be published without delay.
Despite his attempts in recent years to distance himself from the Haughey era, this debacle had again reminded the public that the present Taoiseach for much of his political career was Mr Haughey's closest lieutenant, Mr Noonan added.
The Labour leader, Mr Ruairi Quinn, said the issue was a test of the Taoiseach and his new model for Fianna Fail.
He asked Mr Ahern if it was not appropriate that Mr Kelly, notwithstanding his competency, should have stepped aside so that justice would not only be done but be seen to be done.
The only new information was injected into the debate by the DL spokesman, Mr Pat Rabbitte, who said two appeal commissioners heard Mr Michael Lowry's case while only one heard Mr Haughey's appeal.
The Tanaiste, Ms Harney, said last night that as a member of Government she wished there was something it could do to overturn the decision.
Mr Michael Noonan: called for arguments which led to Mr Kelly's conclusions to be published without delay.
Ms Harney: said that as a member of Government she wished there was something it could do to overturn the decision.
