Politicians have called on Dublin City Council to explain why a 10-year, €6.6 million interest-free loan was given to a building company in 2011.
Details of the loan were disclosed in The Irish Times earlier this week.
The council pledged to prepare a comprehensive response within days.
However, a spokesman said on Friday the council would not be commenting on the matter due to ongoing legal proceedings relating to the transaction.
The Department of Housing, Planning, Community and Local Government has yet to comment.
Agreements in late 2011 between council subsidiary Ballymun Regeneration Ltd and James Elliott Construction Ltd (JEC) stated that the loan was designed to help fund remedial work on building work done by JEC in Ballymun.
It was also to fund litigation by JEC against Irish Asphalt Ltd, which had supplied material for the work that was subsequently discovered had high levels of pyrite content.
The agreements included details as to who would be in control of any such litigation and how any awards received would be treated. They included an indemnity against adverse costs rulings for JEC.
The remedial work, worth about €10 million, may have involved a profit and was given to JEC without tendering. Patrick Elliott, a director of JEC, declined to comment.
Fine Gael TD for Dublin North West Noel Rock said the transaction as reported appeared "deeply unorthodox".
He said it was “frankly alarming” that the council had yet to give an explanation.
Sinn Féin TD Dessie Ellis, also from Dublin North West, called on the council to explain the reasoning behind the loan and the decision to commission the remedial work without placing it out to tender.
“This situation seems to be highly unusual in regards to a €6.6 million loan from Ballymun Regeneration to a construction company to repair buildings which it had built initially and that part of the loan was intended to fund litigation.”
He said was told in 2011 that the Department of the Environment, Community, and Local Government had approved a budget of €9.3 million for the pyrite remediation and completion works in Ballymun.
He said he wanted to know whether the €6.6 million was part of this, or in addition to it.