The chief executive of ISME, the small firms lobby group, has resigned from his position and will take on a new role with the organisation. Mr Frank Mulcahy is to become director of communications.

The move follows a bitter internal dispute over policy and finances within ISME. A new director/manager with responsibility for finance and day-to-day operations will be appointed in the near future.

Members of ISME's national executive council - which comprises representatives of 40 member firms - met for three-and-a-half hours yesterday to consider a report of a finance sub-committee. The committee had been asked to look into a series of issues concerning the organisation's financial affairs.

One of the issues concerned a cheque for £26,000 which was written by Mr Mulcahy for a deposit on a house which he bought last year. It is understood that Mr Mulcahy believed he was owed this money in bonuses and other remuneration.

ISME chairman Mr Seamus Butler said last night that the finance committee had found no evidence of illegal or fraudulent activity. He said there had been "a frank exchange of views at the meeting, but no blood on the carpet".

The executive council, which includes Mr Eoghan Hynes, Mr Terry Hobdell, Ms Irene Bergin, Mr Don Curry and Mr Butler, also conducted its own investigation into ISME's financial procedures. There had also been questions over some of Mr Mulcahy's expenses.

Mr Butler said there had been very little differences between the executive council and finance committee on "findings of fact".

He said it had been agreed that errors had obviously arisen and that all sides had agreed that where it is found that Mr Mulcahy is owed money, he will be repaid, and if the reverse is the case, he will repay ISME.