Fianna Fail has asked the Revenue Commissioners to conduct an inquiry into a past practice under which donors picked up the bills for services provided to the party.
The inquiry will try to establish whether the transactions involved any breaches of tax law. The move was initiated by the Taoiseach, Mr Ahern, after internal inquiries in March into the Rennicks payment to Mr Ray Burke.
A spokesman for Fine Gael said yesterday it had also allowed some of its bills to be paid by private companies, although it could not specify the amounts involved.
Mr Ahern told members of the Fianna Fail Parliamentary Party attending yesterday's final session of the two-day special conference in Ballyconnell, Co Cavan, that he had asked Revenue officials to examine the matter.
It is understood the party has provided examples of bills which were paid by donors, so that the Revenue could decide whether there was anything wrong in principle.
The practice by which donors paid bills on behalf of the two main political parties was known as "pick-me-ups" and was mainly used to fund election expenses. Typically, a company would offer to pick up expenses for the printing of leaflets or posters.
In the case of Fianna Fail, for example, a number of donors were billed directly by Irish Printers, the party's printing company run by fund-raiser Mr Paul Kavanagh, while advertising companies acting for both Fianna Fail and Fine Gael are understood to have also billed party donors in some cases. In the late 1980s Arks Advertising billed third parties for some services to Fine Gael.
There would not appear to be tax implications for the company providing the service to the party. But the Revenue Commissioners will examine how the donor companies accounted for the payments. If the companies paid the donations from after-tax profits, there would be no tax difficulties. If the money was written off as a business expense, however, the companies may have evaded the appropriate VAT payment, while also artificially depressing their corporation tax bill.
Fianna Fail sources said the "pick-me-up" donations practice had become less prevalent in recent years. The amounts involved could vary from £5,000 to £25,000, according to one source, while another said such deals could account for 5 per cent of total funds raised.
Fine Gael said it did allow some of its bills to be paid by private companies, but could not say how much, or what proportion of electoral costs such payments would have represented.
The general secretary of the Labour Party, Mr Ray Kavanagh, said last night the party did not ask contributors to pay bills on its behalf and he was not aware that it had used such a system in the past. Progressive Democrats sources also said they were not aware of the party having used such a system.
