The family of former finance minister Brian Lenihan have failed in their bid to challenge "potentially-damaging" evidence to the Oireachtas Banking Inquiry from ex-Taoiseach Brian Cowen.

Mr Lenihan's brother Conor and aunt Mary O'Rourke - both former Fianna Fail ministers - wanted the right to counter any evidence that might "damage" his legacy and reputation.

They sought to do so after reports in this newspaper and the Irish Independent to the effect that Mr Cowen denied overruling Mr Lenihan on the night of the 2008 Bank Guarantee. However, the Sunday Independent has learned that the inquiry has not granted them that right.

The family is understood to be unhappy with the refusal of the inquiry to accede to the demand to give evidence and is considering the matter with its lawyers this weekend.

The €5m inquiry, chaired by Labour TD Ciaran Lynch, responded to Eames Solicitors informing them of its decision.

Speaking to the Sunday Independent, Aidan Eames confirmed receipt of a response from the Banking Inquiry.

"The matter will be discussed and considered with our clients in the coming days," he said.

Conor Lenihan said he was not able to speak about the matter when contacted by the Sunday Independent this weekend. However a source close to the family indicated their unhappiness with the response and said the matter would be examined in full in the coming days.

While the response of the inquiry is seen by the Lenihan family as a refusal, several sources on the committee said that they have taken a "wait-and-see" approach to the situation.

Those sources confirmed that an invitation to the Lenihan family was highly unlikely to be extended.

"Clearly, their letter was a shot across the bows of the inquiry and they are monitoring everything being said. We have said we don't see the need for them to come in, but it is a wait-and-see approach," one source said.

Members of the Inquiry are legally precluded from speaking publicly about the matter and other related matters for fear they could jeopardise the impartiality of the investigations. An Inquiry spokesman said the response was "neither a yes or a no" to the Lenihan family request and restated its commitment to fairness.

Conor Lenihan said he agreed with Prof Honohan that Mr Cowen overruled Mr Lenihan on the guarantee.

Sunday Independent