The Seanad has heard criticism of legal action taken by businessman Denis O'Brien against members and the Houses of the Oireachtas.

The comments were made as the Seanad was debating legislation to set up the Commission of Investigation into certain transactions at the Irish Bank Resolution Corporation.

During the debate, Independent Senator Michael McDowell also criticised suggestions that members who abuse Dáil privilege could be fined.

Mr McDowell said he did not think that members would abuse the privilege. The suggestion was made by Ceann Comhairle Seán Ó Fearghaíl in an interview with RTÉ News last week.

"I do not think the use of financial penalties to preserve the privacy of important people in the Irish political and economic environment should be permitted by this House. I don't think we should go down that road," Mr McDowell said.

He also said allegations of intelligence gathering by an individual who sought to identify the source of leaks about Mr O'Brien's dealings with IBRC were very "serious".

The individual is also understood to have contacted members of the Oireachtas.

Mr McDowell told senators that free speech was very important and that it should be remembered that Mr O'Brien has sued the institutions of the State and individual members of the Oireachtas.

Fine Gael Senator Martin Conway said members who had exposed issues to do with the sale of Siteserv by IBRC to a company controlled by Mr O'Brien had done the State some service.

He said it was incredible the lengths Mr O'Brien was prepared to go to silence them, adding that: "It beggars belief to think that the houses of the Oireachtas are being sued by any individual."