Former Irish Prime Minister Charles Haughey has testified at a tribunal hearing accusations that he received millions of pounds in secret payments during his political career.

In his first session as a witness to the Moriarty Tribunal at Dublin Castle, Mr Haughey faced questions about an overdraft of more than �IR200,000.

The inquiry's legal team has already said that they have identified payments totalling �IR8.5m made to Mr Haughey between 1979 and 1996.

Mr Haughey, who is now 74, said that he had taken out a loan at one bank to pay off debts at another.

"It would seem that I was borrowing from Peter to pay Paul," he admitted.

The former leader of the Fianna Fail party is expected to spend a week in the witness box before the tribunal adjourns for a summer recess. He may also be recalled to give more evidence later in the year.

Lavish lifestyle

As Mr Haughey arrived for Friday morning's hearing, he was heckled by a small number of banner-waving protestors.

His appearance in the witness box is being seen as the most crucial phase in the long-running inquiry into payments to politicians which has gripped the Irish Republic for the last few months.

The Moriarty Tribunal is expected to ask Mr Haughey to explain his lavish lifestyle during his years of public service.

The hearings were set up following the McCracken Tribunal of 1997 which found evidence of donations to Mr Haughey by businessmen, but concluded that there was no evidence of political impropriety relating to the payments.

Mr Haughey retired from active politics in 1992, and in the witness box he no longer cut the swaggering figure seen in his years as prime minister.

Several times, he admitted he was overwhelmed by the documents about his financial affairs dating back several decades.

Friday morning's proceedings inside Dublin Castle were intensely detailed and dry in tone, but there was enough interest from the public for a queue to form for seats in the small gallery.

Sam Smyth: Newspaper columnist

But a muted reaction to Mr Haughey when he arrived at the castle suggested that the Irish people are becoming somewhat inured to the three current tribunals and some 16 inquiries which are principally dealing with claims of corruption.

Award winning columnist Sam Smyth of the Irish Independent newspaper explained that people were able to follow the broad sweep of the stories, but got lost in the detail.

He said the public tended to regard the legal proceedings rather like a dark soap opera, and he said: "What people say is that if you're not confused, you don't understand the question."

Joking apart, he believes the tribunals have had a major positive effect.

"I think the political culture has been changed, changed forever, and probably for the better.

"What Ireland is going through now is a form of adolescent reaction to some of the earlier, laissez-faire ways of doing politics.

"I think it will lead to a maturing and a taking of public life much more seriously by those involved."