The Sinn Féin leader has said Senator Elisha McCallion and two officials in Northern Ireland have resigned after revelations that three party offices incorrectly received payments from a Covid-19 grant scheme.

Mary Lou McDonald said she accepted the resignations of the three individuals responsible for the accounts and for not returning the money.

The others who have resigned are the Chair of Upper Bann Comhairle Ceantair and a party official in West Tyrone.

"The failure to immediately return grants erroneously paid into Sinn Féin accounts is a most serious situation," Ms McDonald said.

"As party leader I wish to acknowledge and apologise for these failures."

In a statement, Ms McCallion apologised and said she had not applied for the grant and did not receive any correspondence about it from the Department of the Economy.

"I fully accept that as a named signature on the account that I should have taken steps to verify this situation, before it was brought to my attention on Monday," she said.

"The money was repaid in full on Tuesday.

"I apologise unreservedly for the poor judgement I showed in relation to this and therefore, last night I spoke to the party leader and tendered my resignation as a member of Seanad Éireann with immediate effect."

The resignation of Ms McCallion will lead to a Seanad by-election.

The seat is unlikely to be held by Sinn Féin as the electorate is made up of Oireachtas members.

It will be the second looming by-election as one must also be held for the seat vacated by former Fine Gael Senator Michael D'Arcy.

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Ms McCallion had been the MP for Foyle from June 2017 to December 2019, when she lost the seat to SDLP leader Colum Eastwood.

In a statement, Ms McDonald said the party leadership had established that three party offices incorrectly received lodgements of £10,000 under the Small Business Grant scheme established by the UK Department of Economy in March 2020.

The grants were not applied for, but were automatically paid to businesses that paid annual rates of up to £15,000 by direct debit.

"Payments were made into constituency accounts in West Tyrone and Lurgan and into Elisha McCallion's account in respect of her former Westminster office," Ms McDonald said.

"In each case the grant money has been returned in full, repayments were made on Monday and Tuesday of this week.

"These monies should have been returned immediately as no political offices qualified for this grant. The fact that this did not happen is unacceptable.

"The party has established in each case where responsibility lay for the administration of the accounts in question and for the reimbursement of these monies.

"The Sinn Féin Ard Chomhairle met last night and censured all those involved.

"Last night, I accepted the resignation of Senator Elisha McCallion. She accepts full responsibility for the failure to return the grant immediately.

"The party also accepted the resignation of the party official in West Tyrone who had responsibility for the administration of the account and failed to promptly return the grant money despite being requested to do so by Maolíosa McHugh MLA.

"The Cathaoirleach (chairperson) of the Upper Bann Comhairle Ceantair (Constituency Organisation) has also tendered his resignation in recognition of their failure to return the grant payment in a timely fashion.

"The Small Business Grant scheme was established to support struggling businesses in times of extraordinary hardship.

"The failure to immediately return grants erroneously paid into Sinn Féin accounts is a most serious situation."

Not returning funds was 'wrong' - O'Neill

Speaking at a media briefing today, Deputy First Minister and Sinn Féin leader in Northern Ireland Michelle O'Neill said the decision not to return the Covid-19 relief funds was "wrong" and that it should not have happened.

"We have been very clear in saying it was totally unacceptable," Ms O'Neill added.

First Minister Arlene Foster said no DUP member received the grant, adding the party made sure that none of the party offices received the grant.

"If a landlord received money that it shouldn't have, then it should be returned, and if it hasn't the Department of Finance should pursue that money," Mrs Foster added.

She said the scheme was designed that it would not benefit politicians.

"It has to be paid back because it is public money," Mrs Foster added.

"It was put in place to help businesses that were struggling at that time, so there is no way politicians or landlords should have been in receipt of that money.

"They have a moral and legal duty to pay that money back." 

Additional reporting Sandra Hurley