The CIF is taking the state to the European Court of Justice over new contracts which will fix the cost of public building projects financed by the OPW.

It has also emerged that Parlon awarded more than 60m to Irish builders in the three months before they appointed him as head of the CIF.

The government introduced the fixed-price contracts in February in a bid to halt big cost over-runs. But they have been met with staunch opposition from the CIF. A few weeks after their introduction, Parlon described them as a "key reform" and said they would lead to "greater price certainty".

Now, as head of the CIF, he will oversee a court challenge in which the federation will argue that the new contracts will force construction firms to assume all of the risk associated with infrastructure building. This, says the CIF, will inevitably force upwards the prices quoted in tenders.

Parlon has signed off on seven major building contracts this year under the government's decentralisation programme. The contracts are worth at least 60m to members of the CIF. This compares to just one major decentralisation building project sanctioned last year.

The latest developments in Parlon's flight from politics to business are likely to intensify calls for stricter regulations on potential conflicts of interest for politicians leaving office.

The Green Party has already called for new rules.

"Providing a buffer period of 12 months, during which such politicians could not take up private sector employment relating to their previous area of responsibility could help to ensure that there is no perception of a conflict of interest, " said Green TD Ciaran Cuffe, who claimed he had sounded out his party and the government on the proposal.

Since 2004, civil servants or government employees have had to seek permission to take up a new job in the private sector, if that position could be construed as representing a conflict of interest.

In some cases, they have had to wait 12 months before beginning their new jobs.

"If civil servants have to abide by this, then the same should apply to their employers . . . the politicians, " said a spokesman for the AHCPS union, which represents senior civil servants.

Allowing Parlon's controversial move may be contrary to the UN Convention against Corruption which Ireland signed in 2003. Article 12 obliges government to prevent "conflicts of interest" by imposing restrictions on the employment of public officials by the private sector after their resignation or retirement, where such employment "relates directly to the functions held or supervised by those public officials during their tenure".