Confidential cabinet papers released under the 30-year rule reveal the Fianna Fáil administration sought to alter legislation with amendments specifically designed to benefit the Goodman International group.
Records show the Government voted to change the Finance Act 1986 to exclude the food processing industry from having to pay tax on grants.
It also looked for a revision of disadvantaged areas to include Louth — Mr Goodman’s native county — the intended location for a major new headquarters for Goodman International.
The changes were proposed after the beef baron had rejected a major IDA initiative worth €42m in grants, equity and EEC funding to develop Irish beef exports.
State papers reveal the minister for agriculture, Michael O’Kennedy, eventually sought government approval in June 1987 for the IDA to provide a package worth £60m to Goodman International after he had originally sought £90m.
The businessman claimed the offer of a further £48m to be provided in currency swap loans would cause problems for his group structure.
Documents show the IDA believed Mr Goodman used this as an excuse to increase the grant and equity element of the total package.
“A game of poker is being played,” the IDA warned officials in the Department of the Taoiseach.
The IDA contacted the officials because they believed Mr Goodman would ask Mr Haughey as well as the minister for industry and commerce, Albert Reynolds, to intervene in the dispute.
The IDA insisted they would find it difficult to make a better offer as it was already “very good and innovative”.
The beef processing group, founded by Mr Goodman in 1961, had become one of Europe’s largest beef exporters with annual turnover in excess of £500m.
It operated 13 beef, lamb and pig processing plants in Ireland and Britain. The company employed 960 staff in the Republic.
“The plan will result in a new generation of meat factories with a technical capacity to produce long shelf-life, consumer cuts for exports,” Mr O’Kennedy said.
The Department of Agriculture estimated the initiative would generate 664 new full-time positions as well as 500 seasonal jobs.
It calculated that the State would provide funding of up to £90,000 for each new job created, compared to the average cost at the time of £13,000 for other projects in the food sector.
The total cost of the five-year investment plan was an estimated £261m.
Cabinet records reveal that the minister for finance, Ray MacSharry had “serious reservations” about the deal.
Mr MacSharry claimed the project would result in increased slaughtering of animals at a time when there was already over-capacity in the sector.
“The success of the project is likely to result in the failure of other firms,” he predicted.
Mr MacSharry added: “The project will increase substantially the dominant position held by Goodman. That would be detrimental to other processors and farmers.”
He also said the cost for each new job was “unprecedentedly and unacceptably high.”
The minister for finance said he could not support the project in its existing form.
Reacting to Mr MacSharry’s observations, Mr Reynolds said conditions imposed by the IDA would adequately protect against over-capacity in the sector.
The report also noted that Mr Goodman appeared to have considerable influence in Brussels.
“Some Commission initiatives in recent years have been very obviously in line with views Mr Goodman was known to hold,” it added.
However, it said the businessman tended to expect the Department of Agriculture to deliver items on his “shopping list” that the EEC had already rejected.