Former government press secretary Frank Dunlop told the tribunal that he bought a horse or "a leg of a horse" for almost £64,000 in 1992, but he never saw the animal and it died the following year.
The tribunal heard that in March and May 1992, Mr Dunlop paid horse breeder Jim Bolger a total of £63,917 for a horse or a share in a horse.
Patricia Dillon SC, counsel for the tribunal, said Mr Bolger bred the horse from his own stock, it was never named or registered with the Turf Club and had no equine passport. The "unfortunate animal died" in July 1993, after colliding with another horse, Ms Dillon said.
Mr Dunlop never saw the horse, was given no documentation and did not recall making the purchase until he researched payments from his accounts queried by the tribunal in 2000.
Tribunal chairman Judge Alan Mahon said that at the time, the money would have bought a house in Dublin and would be worth €200,000 now. "It would be a phenomenally expensive horse to buy either today or in the early 1990s," he said. "It would be a near record price, certainly, if it was a percentage of a horse."
Mr Dunlop said he trusted Mr Bolger's judgment. "I knew nothing about horses other than they have four legs and they run in races," he said.
Judge Mahon said the loss of his investment must have been "one of the most shocking events" in Mr Dunlop's life, in financial terms, and was the equivalent of €200,000 "down the drain".
Mr Dunlop said until the tribunal brought it up, he hadn't given it another thought.
Ms Dillon said Mr Dunlop's investment had "vapourised on the fields of Carlow" and asked if he had actually borrowed money for Mr Bolger. Mr Dunlop said no.
She noted that Mr Bolger was a friend of the late Liam Lawlor, who later named him as a "trustee" in his will. She asked if Mr Dunlop had paid money to Mr Bolger for "onward transmission" to Mr Lawlor or anyone else.
"Definitely not," Mr Dunlop said.
He also denied paying £20,000 to a senior politician in 1992. Mr Dunlop borrowed £20,000 from AIB on February 4th, 1992, and the money "effectively disappeared into a clear blue sky", Ms Dillon said.
At the time, Mr Dunlop was employed by developers Owen O'Callaghan and Tom Gilmartin to garner support for the Liffey Valley Shopping Centre at Quarryvale in west Dublin.
Ms Dillon said that on the day he withdrew the money, Mr Dunlop's diary recorded appointments at the Westbury and at a "Chinese opposite the Olympia", as well as a meeting with Mr O'Callaghan.
She asked if there was any possibility he paid a senior politician, or any politician not so far named, with the money. He said he did not, but conceded that some of the money may have "ended up in politicians' hands".
She pointed out that he had £75,000 available to him in accounts at the time and yet he borrowed £20,000 at an interest rate of 15.75 per cent.
She said it was remarkable that he could remember the details of over 100 payments to at least nine councillors in the early 1990s, but could not recall what happened to such a large sum.
She said Mr Dunlop either had genuinely no recollection or was lying to the tribunal.
"The answer is the first option that you put forward," Mr Dunlop said.
