In 2003, he enjoyed a round of golf there with Martin McAleese . . . one in a series of meetings they've had over three years. The most recent was last month.

It's a relationship causing grave concern in senior political and civil service circles. Many believe the president's husband is involved in a most dangerous liaison.

"To say senior Department of Foreign Affairs officials are worried is an understatement, " says a government source. "This is a time-bomb waiting to go off. He's in very dodgy territory . . . an unelected individual acting with the clout of his wife's office raises constitutional issues. What's worrying is that UDA crime and violence continues."

Critics say if McAleese was golfing with Slab Murphy, or the president embraced the IRA chiefof-staff, as she did McDonald, there'd be uproar. A unionist source says: "Imagine if the Duke of Edinburgh entertained IRA leaders in a yacht club and the Queen had them at Buckingham Palace?"

McDonald later disclosed that during the afternoon's golf, McAleese helped him secure 30,000 for a junior football team he manages. Through his extensive business contacts, McAleese has obtained funding for many projects in loyalist areas.

"If there's a sniff of funds, Jackie's first out of the traps, " says one loyalist. "He's very shrewd. Jackie's a chameleon. He sings whatever song suits the occasion. When he's with Martin, he talks the talk."

The McAleese connection has hugely benefited the UDA, the source says: "It's brought big bucks into loyalist districts and that gives the UDA power." Non-paramilitary community activists complain this undermines their position. So grateful was the UDA to the president's husband that they joked a lounge in one of their pubs might be named 'the Martin McAleese suite'.

McDonald, 58, isn't the stereotypical loyalist sporting gold jewellery and tattoos. "There's nothing flash or tacky about Jackie, " says a loyalist admirer. "He takes a few pints but no more. He doesn't womanise. He has a four-wheel-drive but it's a conservative one. He's done well racketeering in the past, and has a few quid put away, but he still lives in an ordinary house in Taughmonagh (a working-class estate).

"He's happiest in trainers and a tracksuit but he can pass himself anywhere. He'd be perfectly at ease in the K Club. He's good company and a great storyteller."

UDA sources say McDonald's desire for selfpreservation meant he never saw "active service", preferring "the money side of things". In 1990, he was sentenced to 10 years' imprisonment for extortion against businessmen.

In February 2003, he carried the coffin of UDA southeast Antrim brigadier John Gregg who, in the previous 18 months, was responsible for three murders: Catholic postman Daniel McColgan, 20;

Protestant schoolboy Gavin Brett, 18, mistaken for a Catholic; and Catholic Gerard Lawlor, 19.

Local priest Fr Dan Whyte of St Mary's on the Hill says: "Nobody's ever been brought to justice for these murders. Local people are still in pain and they're astonished the southern establishment is entertaining Jackie McDonald. Dublin 4 would be swinging from the chandeliers in outrage if the IRA was being entertained."

DUP justice spokesman, Ian Paisley jnr, says:

"The McAleeses cavort with people regarded as hoods here. The DUP would be lambasted if it did that."

McDonald attended the president's 2004 inauguration and also, reportedly, her birthday party.

Sinn Fein figures with IRA links, who have visited the Aras, have a democratic mandate; the UDA secures no votes.

Technically, the group is on ceasefire but, according to last month's IMC report, still undertakes "targeting, shootings and assaults" and engages in "drug-dealing, extortion, money laundering and robbery". McDonald is cleaning up the organisation. He's very close to the Northern Ireland Office.

He's personally anti-drugs and now also antiracketeering, envisaging a future of private and government funding instead. UDA sectarian killings have declined, but there's still a long way to go.

Last month, Martin McAleese met up to 10 loyalists, including Egyptian Ihab Shoukri, at the Wellington Park hotel in south Belfast's affluent Malone Road. Later, Shoukri was arrested in a more downmarket Belfast hostelry where a dress rehearsal for a UDA show of strength was allegedly happening. He was already facing UDA membership charges.

A month earlier, the UDA in Carrickfergus, Co Antrim, beat to death Protestant Thomas Hollran, 49, and the body of drug-dealer Ronnie Todd, 30, was found in the River Lagan. Security sources suspect the UDA.

Playwright Gary Mitchell is currently in hiding after a UDA petrol bomb attack on his Newtownabbey home. In October, the UDA killed its east Belfast brigadier, Jim Gray. Seven months earlier, Protestant Stephen Nelson died after a brutal UDA beating outside a Newtownabbey nightclub.

Continuing violence doesn't deter the McAleese/McDonald relationship. The president met him on the Shankill in September 2003. Two months later, the UDA beat Catholic James McMahon, 21, to death with baseball bats. Sources say McDonald sees such incidents as "blips".

Martin McAleese reportedly helped arrange the meeting between McDonald and the Taoiseach in January 2004. Earlier that month, the North's then security minister, Jane Kennedy, blamed the UDA for attacking Catholics' homes. The following month, Chief Constable Hugh Orde linked the UDA to murder, beatings, drugs and over 50 'punishment' attacks.

"No one is suggesting the McAleeses condone violence. They think they're helping peace, but they're naive, " says a government source. Martin McAleese's initiative is fully supported by his close friend, foreign affairs minister Dermot Ahern.

But two separate government sources told the Sunday Tribune that Department of Foreign Affairs secretary-general Dermot Gallagher disagrees with the minister and has voiced serious concerns about Martin McAleese's activities.

There are also concerns about "the dubious cross-over" between Martin McAleese's activities and those of department officials. Ulster Unionist peer Lord Laird claims the government funded media training by southern media figures for loyalist leaders in the North three years ago.

"It was facilitated by a Department of Foreign Affairs official in the North after, I believe, Martin McAleese's intervention, " says Laird. "Do southern tax-payers want to pay to tidy up the image of Protestant killers?" A government source confirmed loyalist media training took place but didn't know how it was funded.

A nationalist source says a Department of Foreign Affairs official in the North is facilitating 120,000 funding, provided by McAleese's business friends, to replace loyalist wall murals and graffiti at Harryville Catholic Church in Ballymena with neutral images. "It's a huge sum . . . maybe they're painting in gold!" he says.

He claims loyalist attacks on local Catholics last summer were deliberately aimed at securing this funding: "Violence is turned on and off like a tap to get money."

A Department of Foreign Affairs spokesman said it was "absolutely untrue" Dermot Gallagher was dissatisfied with Martin McAleese's activities:

"Martin McAleese's work is that of a private individual. It's completely in keeping with the government's objective in Northern Ireland in reaching out to the marginalized in both communities."

The spokesman denied the state-funded loyalist media training. While Martin McAleese's associates may fund the Ballymena project, the sum involved was significantly smaller, the spokesman said. He wasn't "in a position to establish" if the department "facilitated" either the loyalist media training or the Ballymena project.

The Sunday Tribune put detailed questions to the Aras about Martin McAleese's activities. We asked for information on meetings with McDonald, what financial packages he'd secured for loyalist areas, if his contact with the UDA was appropriate for the head of state's spouse, and if socialising with leaders of an organisation still mired in violence and criminality was fitting.

A spokeswoman declined to answer the specific questions, except to say Martin McAleese wasn't involved in allocating government funding but had helped facilitate contact between small community projects in marginalised areas and "private funding sources".

Over 14,000 Northerners had visited the Aras as part of "a bridge-building" exercise supported by the government, she said. The McAleeses were "engaged in a wide-ranging programme of outreach to all sections of the community in Northern Ireland in the best interests of consolidating lasting peace".

Many in the SDLP remain unconvinced about Martin McAleese's liaison with McDonald: "It's not a case of double standards, it's a case of no standards, " says a senior source.

"The contact is well-meaning but has been going on so long and has achieved so little. South Belfast has the most racist incidents [159 last year] in the North and the most racketeering. The apparent transition from baseball bats to golf clubs doesn't wash."

As well as private funding, a multi-million-euro government package for loyalist areas will soon be unveiled. In return, the UDA will announce the disbandment of its military front, the UFF, but won't decommission. "It's not good enough, " says the SDLP insider. "They're saying 'we'll stop violence if you give us lots of money'. That's a polite form of extortion."