THE year is 1930, and on the flickering black-and-white screen two blind boys are reaching into a giant metal drum to pull tickets from the deluge of entries in the inaugural Irish Sweepstakes. Around their necks, on large unwieldy placards, are their names - "Peter" and "Willie". The boys, students at St Joseph's School in Drumcondra, have been selected for a single purpose.

THE year is 1930, and on the flickering black-and-white screen two blind boys are reaching into a giant metal drum to pull tickets from the deluge of entries in the inaugural Irish Sweepstakes. Around their necks, on large unwieldy placards, are their names - "Peter" and "Willie". The boys, students at St Joseph's School in Drumcondra, have been selected for a single purpose. Blind, grasping for tickets they cannot see, they are demonstrably unable to cheat.

Today, to a more enlightened audience, the image is naive, and the cynicism and exploitation behind it almost unimaginable. The Irish Sweeps, touted around the world as a charity launched to help a nascent health care system, has long been exposed as one of the country's greatest scandals. Of the millions that poured in, it has been estimated that less than one tenth went to hospitals. The remainder turned rich men into multimillionaires, and created law enforcement problems on both sides of the Atlantic.

Across 30 years, stories of the Sweepstakes empire have been legion. Journalist Joe MacAnthony, who first exposed the debacle in this newspaper in 1973, revealed how a Canadian policeman once told him of the astonishing wealth of one ticket distributor whose house was raided by police. When his dog soiled an expensive oriental rug, the distributor just laughed and told them: "When he does that, I just roll up the carpet and throw it out. Then I buy another one".

For decades, the greed that propelled the Irish Sweeps soiled Ireland's image around the world. In an RTE Hidden History documentary last week, those who investigated the story remembered how it propagated the perception of Ireland as a country of rogues. The American edition of Reader's Digest once described the Sweeps as "the greatest bleeding heart racket in the world".

The scope of it was breathtaking. While the betting operation purported to be run for charity - and underlined the notion at every turn by using nurses and gardai to lend legitimacy to its draws - its true purpose was to create huge profits for a core of influential schemers.

Three men launched the Sweepstakes: Dublin bookie Richard Duggan, Welsh-born Captain Spencer Freeman and celebrated republican Joseph McGrath, once an associate of Michael Collins.

Government legislation giving the state's blessing to the plan was so full of loopholes that the Sweepstakes' organisers could leave enormous sums undeclared as expenses. Perhaps the biggest irony of all was that while the promoters were not liable for tax in Ireland, the hospitals had to fork out a quarter of their comparative pittance to the revenue commissioners.

How could it happen? As complaints poured in from America and Britain, where gambling was illegal, the promoters flaunted the Sweeps, launching lavish Mardi Gras-style parades in Dublin. Tickets were smuggled into America and sold illegally. Much of the money never came back to Ireland.

The plan suited successive Irish governments who were unprepared to fund hospitals from normal revenue, but there were other, darker reasons for the extraordinary leeway the promoters enjoyed.

"You would find that people who were directors of the Irish Sweepstakes were also directors of 20 to 30 other companies as well," JoeMacAnthony remembers, "so their influence and their money spread into other areas of the Irish economy."

There was more. The Sweepstakes bankrolled some TDs, paying for deposits at elections and giving donations for campaign expenses. Fianna Fail, Fine Gael and Labour deputies were involved.

Des O'Malley, Minister for Justice between 1970 and 1973, told RTE how he had to sign an official deed for each sweepstake. Perplexed by the lack of information on what was happening to the money, he realised his only leverage was to threaten to withhold permission unless he got answers. Very soon, he experienced the power of leverage himself.

"Paddy McGrath (managing director of the Irish Hospitals Trust which handled the sweepstake money) . . . came in to me to say that this was dreadful," Mr O'Malley recalled, "and . . . it would lead to the immediate unemployment . . . of 800 to 900 women; that I couldn't contemplate that, and that even if I could, other members of the Government wouldn't contemplate it and therefore I couldn't do it."

Throughout the Sweepstakes empire, laws were dodged and ethics sidestepped. There were claims of connections to the old IRA. Joseph McGarrity, a senior IRB man, ran the American end of the operation.

At one point, the promoters even arranged to buy shares in potential winning tickets. Sidney Freeman, a brother of Spencer Freeman, was sent to New York to oversee this.

"He would set up an office in the Ritz Carlton Hotel," wrote Joe MacAnthony in the Sunday Independent. "On one occasion he brought the sum of $1m and eventually made 320 deals for around $700,000."

A part of the profits did, however, find its way into the Irish hospital system. John Slevin, the Sweepstakes' finance manager between 1966 and 1987 - and the man who would later help redundant workers fight for a fair settlement - believes the money raised played a vital role.

"Truth be told, the Irish hospitals would not be in the happy state they were in the 1960s and 1970s were it not for the money they got from the Sweepstakes," he said. "And indeed TB would not have been successfully eradicated from the country had Noel Browne not used every available pound that he could get from the proceeds."

Such charity, however, represented only a small fraction of the sums Joe MacAnthony discovered in 1973, and he was to find out at first hand how profit can wield power. When this newspaper published the result of his investigations, advertising was pulled for two months.

Some years later, RTE journalists felt the same force working. Charlie Bird, as a documentary researcher, unearthed a Government memo expressing serious concern about the Irish Sweepstakes. It is claimed the promoters expressed concern to RTE. And for whatever reason, the planned programme was never screened.

"We had chapter and verse," said reporter Michael Heney. "We should have broadcast it; we should have broadcast something close to what we presented to our management. The fact that we didn't, I think, was a failure by the state broadcaster."

With more than 70 years of hindsight, the scandal of the Irish Sweeps serves as both tainted history and a warning of what can go wrong when greed is allowed to take up with charity. Ireland has changed - the image of blind children selling gaming tickets is now unthinkable - but the lessons remain.

Above all, perhaps, the story underlines what journalism must continue to combat: censorship, state secrecy and the unwarranted power of an influential few.