One of the country's leading law firms, Arthur Cox, was paid over €1.6m by finance minister Brian Lenihan for legal advice in respect of the minister's bank guarantee scheme last October even though the high-powered law firm is the legal adviser to Bank of Ireland, who were included in the scheme.

The €1,628,000 payment to Arthur Cox was revealed in the Dáil last week by Lenihan.

Under the bank guarantee scheme, the taxpayer guarantees loans and deposits to the estimated value of €465bn in Bank of Ireland, AIB, Irish Permanent, Irish Nationwide, EBS and the recently nationalised Anglo Irish Bank.

As well as legal adviser to Bank of Ireland, Arthur Cox has also acted in a number of specific deals for AIB and the troubled Anglo Irish Bank. Along with Bank of Ireland, AIB and Anglo also benefited from the state guarantee scheme.

Questions have been raised as to whether using Arthur Cox represented a conflict of interest.

According to the legal firm, Arthur Cox recently represented Anglo's interest in two multimillion-euro deals – one involving a shopping centre in the Netherlands and the other involved securitising a property portfolio in Ireland

The law firm has also been appointed as the lead legal adviser on the nationalisation of Anglo Irish Bank.

Arthur Cox was not the legal adviser hired by Anglo to assure the Financial Regulator that a controversial €300m loan to 10 people to buy shares in the bank was above board, as was suggested in the Dáil last week.