Gerry McCaughey wasn't like the rest of them. He wore his success more palatably. The emollient Monaghan accent, the self-made sincerity, the not-quite-so-razor-sharp suits and the reputation for bucking the system made him different. He exuded good, caring citizenship. An eco-entrepreneur who had the gumption to stand for election, he worried about the planet and every living creature upon it. You trusted him. You dared even to think he might be in the vanguard of an institutional uprising against the pompous, me-féin suits who have been scavenging the country.

Only 27 nights ago, he was on Questions and Answers denouncing the golden circle. "When you put €7bn into the banks," he said, "and leave the same people in charge of them, the world wants to see you're changing the way it's run." And you thought, at last, here's a rich businessman who understands the people's abhorrence of the moral laxity that drags us all down. He was a man of principle, prepared to practise what he preached. He advocated the introduction of a carbon tax to save the earth.

"I don't believe anybody can argue against the philosophy of the polluter pays," he asserted on RTÉ television in November 2007. "In fact, what we need is not more taxes – not that there is a net increase in taxes, but that it is rebalanced."

It was reassuring that he had been sent in to "clean up" Dublin's docklands, an Aladdin's land bank where the interests of wealthy property developers and the exigencies of urban growth have been enjoying a long and lucrative symbiosis. The single biggest development deal in the docklands had targeted the old Glass Bottle factory at Ringsend, with funding provided by Anglo Irish Bank. The then DDDA chairman Lar Bradshaw and fellow director Seán FitzPatrick had also sat side by side on the bank's board. The incestuousness of the arrangement rang alarm bells.

Though McCaughey too bore the provenance of the construction sector, he was regarded as someone with clean hands and the authority to impose transparency on what was going on in the environs of the capital's port. It is ironic that, like Seán FitzPatrick, he was viewed as somebody who was prepared to take on the establishment.

Gormley praises 'clear leadership'

When the environment minister announced the 46-year-old's appointment as chairman of the Dublin Docklands Development Authority on 2 March (to replace Donal O'Connor after his move to chair Anglo Irish Bank), he said McCaughey had "shown clear leadership on issues including regulatory reform, sustainable business practices and the environmental and energy agenda". John Gormley added: "He has the experience to lead the DDDA through this current period of uncertainty and to place it in a position where it can further develop the essential economic and social infrastructure to ensure a truly sustainable and prosperous future for our capital city."

Last Tuesday morning, public faith got another roughing-up when the squalid details were revealed of a scheme used by McCaughey to deprive the exchequer of €4.7m. In a foreshortened twist on the old tax exile ruse, he despatched his new bride to Italy to sit out a 20% capital gains tax quarantine for his €31m share of the €74m proceeds from the sale of his timber-frame building company, Century Homes – the beneficiary of generous state grants and tax breaks in its 15-year existence. In the time it takes to have a baby, the scheme was complete and the new Mrs McCaughey, along with the wives of other Century directors, was free to return to Ireland from her tax vacation in San Remo on the Italian riviera.

Echoing the defence mounted immediately after the disclosure of Seán FitzPatrick's smoke-and-mirrors bank loans to himself at Anglo Irish, the corporate protest went up that McCaughey had done nothing illegal. His actions were "within the letter of the law". He was still "the straightest man" you could meet and "utterly tax compliant". Extracts were leaked from the KPMG memorandum explaining how the tax vacation scheme worked, including the advice to keep schtum about it. That injunction proved insufficient to bother a straight man's conscience.

The almost €5m McCaughey saved in capital gains tax would have paid one and a half times over for the physical education packages rolled out for post primary schools as part of the national obesity strategy. It would have funded two years' worth of dedicated healthcare developments for members of the Travelling community who have a life expectancy in the mid to late 40s. It would have compensated for most of the cuts announced in last autumn's budget in the special education needs allocation. Or it could have footed half the bill for the cervical cancer inoculation programme for teenage girls which the government cancelled due to lack of funds. If push came to shove, it would have contributed more than half the €8m cost of refurbishing the headquarters of the planned Central Bank Commission.

'Sinister forces' responsible for leak

McCaughey has claimed that "sinister forces" leaked the story of his tax affairs in a deliberate smear to remove him from the docklands chairmanship and dictate who runs the fiefdom, but he has failed to provide any evidence to back up his claim. An inquiry from this newspaper to the Department of the Environment as to whether John Gormley intends to investigate the claim elicited no response. The Taoiseach said he could not comment because there was a similar case (involving one of the Ryanair dynasty, his wife and the disposal of €18m worth of company shares, under challenge by the Revenue Commissioners) before the courts. McCaughey, speaking from California, where he spends much of his time, said he was resigning because he did not want his tax arrangements to be "a distraction".

McCaughey knows as well as anyone the importance of tax money. On Questions and Answers four weeks ago, he urged the government to act promptly in raising additional taxes. "It's not a matter of saying 'let's look if we're going to hit the people at the low end or the high end or the people in the middle'. Let's get the plan out. Everybody is talking about sharing the pain but what we're getting is a disjointed response... Take what happened with the pension levy. In many ways, I think what happened there, was the government went after the soft underbelly first because it actually did, in many ways, impact on an awful lot of people who were not well off but at the same time did not address the fact: are you going to put the taxes up on the higher earner? What are you going to do to the middle class? The reality is we know things have to be done. Let's do them."

After the 2005 sale of his company to Cavan-based building materials company Kingspan, Gerry McCaughey continued to run the Century division as chief executive before resigning last January. Though he was regarded as something of a maverick, having fought the established vested interests in the construction sector to secure state support for environmentally-friendly timber-frame, he had access to a network of powerful people. One of Bertie Ahern's closest associates, former attorney general and European Commissioner David Byrne, joined the Kingspan board in January 2005. Another of the company's directors is Danny Kitchen, board member of controversial Irish Nationwide Building Society. Kitchen, who is the Irish Stock Exchange's nominated director of the Irish Takeover Panel, famously turned down the job of Irish Nationwide chief executive when the salary was capped at €360,000.

Meanwhile, Gerry McCaughey – who also resigned last week as chairman of the state's Property Registration Authority – has embarked on a new business venture. Planning permission was formally granted on 13 February last for a €40m nursing home and retirement estate in the grounds of Drumreaske Demesne, Ballinode, near the Fermanagh border. The estate, which encompasses a lake and a river, is being developed by McCaughey, his brother Gary – a co-founder of Century Homes – and Monaghan solicitor Patrick Macklin. The latter featured in the Revenue list of tax defaulters in June 2007 with a bill of €2.2m for under-declaring income and possession of a bogus non-resident account.

According to a local historian of elections in Monaghan, Gerry McCaughey founded the first branch of Ógra Fianna Fáil in Dundalk regional college when he was a student there in the 1980s. It was under the banner of the PDs, however, that he sought election to the Dáil in 2002. His choice of party was no surprise in Monaghan where he had a reputation as being ideologically opposed to trade unionism. He once opined that, had the PDs existed during the McCarthy era in the US, "they would have been called communists".

Despite being talked about as a potential leader of the soon-to-be obsolete party, he polled just 1,131 first-preference votes and lost his deposit.

State appointments as political perks

His public humiliation has resurrected the debate about how Ireland chooses its caretakers. Bertie Ahern, who appointed his friend and failed businessman Joe Burke as chairman of Dublin Port Company for two consecutive terms, practically bragged about the crony system of preferment. Appointments to state boards have historically been treated as political perks to be dispensed as largesse by the ruling party. Unlike other countries, there is no formal structure in place for selecting candidates for directorships. There is not even a simple sheet of paper requiring the chosen ones to answer questions about their tax compliance, conflicts of interest or criminal records, if any.

When Gerry McCaughey resigned in disgrace from the DDDA last week, John Gormley reiterated that he was "a sincere and honest person".

What is the denial of the people's entitlement in one man's book is no more than an efficient and perfectly legal tax avoidance to another.

The relevant issue at this stage is how many more times the people's faith in their appointed white knights can be shattered, before the damage proves irreparable.