Senior gardaí were today accused of turning a blind eye to allegations that a top officer wanted to bury an email casting doubt on the credibility of an FBI informant.
The agent, David Rupert, infiltrated the Real IRA in the late 1990s and helped bring down the leadership, but a court heard claims that Assistant Garda Commissioner Dermot Jennings did not care about terrorism in the North.
The civil action, taken by relatives of those killed in the Omagh bomb, heard British Intelligence agency MI5 was told Mr Jennings wanted to cover up the email sent by Rupert to British Secret Service.
Rupert told his handlers Mr Jennings, then a chief superintendent, was indifferent to terrorism in the north and only cared about the Republic, the court was told.
An MI5 memo claims that if the garda denied the allegation it would make Rupert appear untrustworthy, damaging Real IRA prosecutions, and he asked for it be removed.
Rupert infiltrated the Real IRA in the 1990s and was the main witness in the criminal case leading to the conviction of Michael McKevitt for directing terrorism in August 2003.
McKevitt, the alleged leader of the terrorist group, is being sued by the families of the those killed in the August 1998 atrocity, along with Liam Campbell, said to be his number two, Colm Murphy, Seamus McKenna and Seamus Daly.
All deny any involvement in the bombing.
Barrister Michael O'Higgins today claimed the gardai deliberately ignored the allegation to protect Rupert's credibility.
"This was something that screamed out for investigation and it wasn't," Mr O'Higgins said.
"(I'm) impugning the credibility of An Garda Síochána in turning a blind eye to an allegation that this case could be fixed up in such a way that the rotten credibility of the witness could be protected."
He said the only way the gardaí dealt with the claim was for Mr Jennings to write an eight line rebuttal.
Detective Superintendent Diarmuid O'Sullivan, who was in charge of the investigation into the McKevitt case, denied claims there was a garda cover-up.
Mr O'Higgins also hit out at the way in which Mr Jennings, who was then head of the garda's crime and security branch, failed to follow proper procedures for dealing with informers when holding clandestine meetings with Rupert in 1999.
He said no notes were taken of the conversations yet best international police practice was to keep a record of any information received and assess the source's credibility.
Despite Jennings describing Rupert as a liar, there were no notes from him to suggest this and it was only in meetings with the British Secret Service that such sentiments were recorded, Mr O'Higgins said.
Rupert also claimed to Mr Jennings in 2001 that he was on the Real IRA Army Council, which Mr O'Higgins claimed was a preposterous assumption.
"If it hadn't been for the British Security services writing it down and making it available to the state and Mr McKevitt, we would never have known that Dermot Jennings thought Rupert was a bulls******," Mr O'Higgins said.
Mr O'Sullivan said because of Mr Jennings' senior position he may not have noted what Rupert told him because he may not have deemed it important.
McKevitt appealed his 20-year prison sentenced but that was dismissed by the Supreme Court in July.
The groundbreaking civil case is the first time evidence from a case in the North has been heard in the Republic.
Last December, a Belfast judge cleared Sean Hoey, the only man yet charged in direct connection with the car bomb attack, which ripped through the Co Tyrone town, killing 29 people including a woman pregnant with twins.
The case was adjourned to the end of the month.