A major music promoter gave Punchestown racecourse a €320,000 loan in return for exclusivity rights to use the course and the Agricultural and Equestrian Event Centre for music and other entertainment events.
MCD, which is one of the largest promoters in the country, loaned the money to Punchestown in late 2001 when the course was in a deep financial crisis and did not have sufficient funds to operate on a day-to-day basis.
Senior figures involved in the racecourse said that the promoter received exclusivity rights for certain types of events at the centre and the racecourse.
The MCD deal was done after the Government had committed nearly €15 million to provide 100 per cent funding to the event centre, which was designed to be a national home for agricultural and equestrian activities.
Since the loan, the event centre and the racecourse have been used to host the Witness music festival, one of the major summer festivals organised by MCD.
Mr Denis Desmond, MCD's owner, is also one of the original backers of the firm behind Santa's Kingdom, which has become a major tenant at Punchestown's agricultural event centre, accounting for nearly half of its usage. Mr Desmond owns 21 per cent of Santa's Kingdom Ltd and is a director of the firm.
Throughout the current controversy, the Government Ministers who approved the grant aid, the Minister for Finance, Mr McCreevy, and the Minister for Agriculture, Mr Walsh, said there had been a proper evaluation of the project before funding was approved.
The Comptroller and Auditor General, Mr John Purcell, who criticised the lack of evaluation in his annual report, has been asked by the Public Accounts Committee to re-examine the Punchestown issue.
Following a private committee meeting on Thursday, he was asked to advise whether a value- for-money audit should be carried out on the State spending.
He has also been asked to advise how the State can impose a binding legal contract on Punchestown to ensure there are no future liabilities and that it continues to operate as an agricultural and equestrian event centre.
As part of this process the Public Accounts Committee is now expected to seek details of the MCD loan agreement. Committee chairman Mr John Perry said he was concerned that the committee had not been told about the loan during a visit to the event centre on Wednesday.
"If a legal agreement was signed, all these details should be made known, including how long it lasts and what facilities it involves," he said.
According to information provided to the committee on Wednesday, use of the centre had been "highly profitable for the promoters" rather than Punchestown, he said.
It is believed the loan was provided in the form of an advance on future fees from MCD to Punchestown for music and other events, tying it into an exclusivity deal. Such deals are normal in the entertainment business
A spokesman for MCD declined to provide any details on the deal. "In accordance with standard business practice, details of contracts between MCD and other parties are private and confidential," he said.
Mr Desmond is one of the wealthiest entertainment entrepreneurs in the country.
MCD is the largest concert promoter in the country, and is behind many of the largest music events, including the annual Slane concert. It was also behind the Robbie Williams concert in the Phoenix Park earlier this year. It also owns the Gaiety Theatre.