Woodchester Bank effectively wrote off a debt of £28,000 to the Labour Party in 1994, a former adviser to the party has said.
Speaking on RTE's Morning Ireland programme yesterday, Mr Fergus Finlay said: "The effect of the donation was to cancel out the debt."
He conceded that the cancellation had relieved him of a potential £6,000 debt, as he had guaranteed a part of the loan. "It's important to state", Mr Finlay said, "that at no stage did we look for that."
The loan was also guaranteed by the former Tanaiste and party leader, Mr Dick Spring, and by Mr John Rogers and Mr Greg Sparks.
Mr Finlay said that the party sent fund-raising letters to up to 1,000 businesses in Ireland on an annual basis, and Woodchester Bank had agreed to donate an amount equal to that which the Labour Party had borrowed to finance the European election campaign of Ms Orla Guerin earlier in 1994.
Individuals, rather than the party, had guaranteed the loan, because it was the party's experience that banks required individuals' guarantees.
The party had decided to borrow £24,000, which with interest came to £28,000, he explained, because Ms Guerin had left her job at RTE to contest the election and had "no money, no income". The estimated cost of running Ms Guerin's campaign was £28,000.
Asked why he did not pay off the part of the loan he had guaranteed, Mr Finlay said that on previous occasions individuals had guaranteed loans "after the election" and these had been absorbed as party debts.
"We were doing it on behalf of the party. We were doing it, as we saw it and as I would assert today . . . for proper democratic party purposes. We were the front people who were trying to raise money for proper purposes."
If Woodchester had indicated that it had not wanted to make a donation, he said, he would have had to pay off the debt. However, he emphasised that it was "a political debt owed in respect of a political campaign".
Denying similarities with other politicians who have had debts written off by banks, Mr Finlay said the money had not been "spent on handmade shirts". He added: "It was not spent on meals in expensive restaurants. It was spent on election literature, election posters and the normal democratic purposes of election campaigning."
Asked if the bank had been doing the Labour Party a "favour", he said that Woodchester had responded positively to a request for funds from the party. "A lot of businesses do. A lot of financial institutions do, " Mr Finlay said.
There had been no particular reason why Labour had approached Woodchester Bank. "It's a bank and we needed a loan, so we went to a bank."
He described the election, in which Ms Bernie Malone and Ms Guerin contested the Dublin constituency for the Party, as a "fairly bitter" campaign. "It was well known that it was very difficult to get them to pose together. It was very difficult to organise any kind of joint event. Individual leaflets, individual posters all had to be printed, and individual campaigns were run."
