The challenge by Dunnes Stores to an authorised officer's investigation of two of its companies took a dramatic turn yesterday when another authorised officer, Mr George Maloney, came to the High Court to deny strongly claims made in court that he had "leaked" confidential information to a newspaper.

There were also angry exchanges between counsel for the State and Mr Adrian Hardiman SC, for Dunnes, about Mr Hardiman's allegations that Department of Enterprise officials were involved in "leaking" confidential information about Dunnes to newspapers. Mr Eoghan Fitzsimons SC, for the Minister for Enterprise and Employment, Ms Harney, said the claims were "outlandish and shameful" and he asked the judge to insist Mr Hardiman withdraw them. Mr Justice Kinlen said he would not make such a request at this stage of the hearing.

Mr Maloney, the authorised officer appointed to Kildare-based Faxhill Homes, was in court yesterday with an affidavit denying allegations that he had leaked information from his investigation to newspapers.

Mr Bill Shipsey SC, for Mr Maloney, said the allegations, repeated in three newspapers, emanated from submissions in court and/or affidavits filed on behalf of Dunnes. These claims were very serious and effectively accused Mr Maloney of a criminal offence.

Counsel said Mr Maloney had sworn he did not leak any such information, nor did he allow such information to be leaked. Mr Maloney had suffered very serious personal and professional damage.

In the proceedings, Dunnes is challenging the appointment by Ms Harney of an authorised officer to two of its companies - Dunnes Stores Ireland Company and Dunnes Stores (Ilac Centre) Limited.

In his affidavit, Mr Maloney, a partner in the firm O'Hare & Associates, chartered accountants, said he was appointed authorised officer to Faxhill Homes on July 22nd, 1998.

He was making the affidavit to deny that information which came into his possession by virtue of that appointment had been leaked and/or disclosed by O'Hares concerning Faxhill. He wished to state categorically that no information or documents had been leaked or disclosed to any third party.

He had forwarded a draft report to Ms Harney on October 8th 1998 and finalised that report in December 1998. Allegations by Mr Jack Tierney, a director of Faxhill Homes, that Mr Maloney had leaked information to the press were completely untrue.

He said Mr Eugene Beglan, a quantity surveyor whom he had also interviewed in relation to Faxhill Homes, had written to Ms Harney on November 3rd 1998 enclosing an article from the Sun- day Times of November 1st 1998 which purported to contain details of the report he had given to Ms Harney. Mr Maloney said he was satisfied neither he nor any of his staff had disclosed information to any journalist and he did not know how the Sunday Times got information about the matter.

Cross-examined by Mr Hardiman, Mr Maloney said he had not spoken to the Sunday Times or to journalist Mr John McManus at any time about his investigation. The Sunday Times had contacted his office on August 21st 1998 but he did not speak to it. He had instructed all his staff, from the time of his appointment, not to speak to journalists.

Earlier yesterday, Mr Hardiman said the other side was seeking to file three more affidavits. He objected to one of these - from the Secretary General of the Department - on grounds of hearsay. After submissions, the judge said he would admit all three as they were but reminded the sides hearsay was not admissible.

Mr Fitzsimons, for the Minister, said Mr Hardiman's intervention was "extraordinary". Mr Hardiman had made the "most outlandish and shameful" allegations about persons not party to the action and not in a position to defend themselves. When those people did seek to produce evidence on the topic, he objected.

Counsel said the affidavits for Dunnes were themselves "full of hearsay" and if this was taken out, they would not be quite as lengthy. Mr Hardiman had made very serious allegations against the Minister and her officials and had said he could prove his claim that the latter had leaked allegations to the Sunday Times. That newspaper was so "taken aback" it had contacted the Department which had now filed an affidavit setting out the newspaper's denial that its information came from the Department.

The hearing continues today.