The Minister for Finance, Mr McCreevy, was concerned in May 2002 that the State's exposure arising out of the controversial indemnity deal with religious orders could significantly exceed the then maximum estimates of €500 million.
Mr McCreevy outlined his concerns to Government colleagues on the eve of the deal being agreed by the Cabinet in June 2002, according to documents supplied to the Public Accounts Committee.
According to a draft memorandum prepared by the Department of Education for the Government in late May of that year, Mr McCreevy echoed the concerns of his Cabinet colleague, the then Attorney General, Mr Michael McDowell, about the potential exposure of the State in relation to compensation claims from the indemnity deal, just before it was signed in early June 2002.
According to the document dated May 31st, 2002, "the observations of the Minister for Finance are that while recognising that an agreement has been reached with the religious congregations, the Minister notes with concern that the estimated overall cost of the redress scheme could, on certain assumptions, significantly exceed the present estimates."
However, since then Mr McCreevy has roundly defended the deal. Last year he rejected charges that the religious orders were let off easily and said the Cabinet's legal advice had been that the orders could have "walked away totally from the deal".
The deal provided an indemnity to 18 religious orders in respect of compensation claims from former residents of industrial schools, children's homes and other child residential institutions, in return for a cash and property contribution amounting to €128 million, of which €80 million is in property transfers to State agencies and charities.
The final bill being faced by the Government is still unknown. On Thursday the Comptroller and Auditor General, Mr John Purcell, said the potential exposure was likely to cost at least €650 million, with an outer limit of €1 billion, including legal costs, although all of the figures were estimates and should be treated with caution.
In the draft memorandum, the concerns of the Attorney General about the potential number of claimants were also outlined.
At that stage there were approximately 2,600 potential claims identified, but Mr McDowell's office warned that there was "certainty" this would increase. "The experience in Canada. where similar compensation/redress schemes have been set up, tells us that the establishment of the scheme itself engenders and encourages more claims, sometimes of the less meritorious variety," the Attorney General's office warned, according to the memorandum.
"All the evidence from the Canadian experience would say that the speculation as to the doubling of the known number of cases (2,600) may be conservative."
He also warned that there was no mechanism in the indemnity deal for increasing the orders' contribution if there was a marked increase in the number of anticipated claims. These concerns were revealed in the Comptroller and Auditor General's report last year.