Cllr Michael Fahy made the donation after a county council investigation into allegations related to a road-widening scheme in the parish.
When questioned by gardaí regarding "irregularities" with invoices submitted for works purportedly done during a Community Involvement Scheme (CIS) near his home, the court heard that Mr Fahy (57), of Caherduff, Ardrahan, said he did not, would not, or ever try to use political privilege on any works.
Galway Circuit Criminal Court heard that Fr Ritchie Higgins, of Ardrahan, wrote a letter of thanks to Mr Fahy for a donation in April 2004.
The letter thanked Mr Fahy for his contribution of €3,000 towards the Ardrahan Lourdes Pilgrimage Fund.
Fr Higgins said the donation was "very kind and thoughtful and very much appreciated."
Det Garda Martin Glynn told the court that the accused was also publicly thanked by the people of Ardrahan parish in their parish newsletter the following Sunday for the "donation".
The note in the newsletter read: "Parish Lourdes Fund gratefully acknowledges receipt of €3,000 from Michael Fahy. This will help to bring some of our parishioners to Lourdes this year."
Mr Fahy had been charged with seven counts of theft, fraud and false accounting over the alleged misappropriation of public money during work on a road leading to his farm near Ardrahan in 2002 and 2003, but Judge Michael White withdrew two charges following legal submissions.
Mr Fahy denies the remaining charges related to obtaining €7,055 by false pretences for fencing on his property and for attempting to defraud the council of €7,523 for works carried out under a public road widening scheme.
Det Glynn said Mr Fahy told him that he assumed the council knew that fencing was being erected on his farm during the schemes. He said 200 loads of stone had been taken from his lands by the council and had been used in Fás schemes the "length and breadth" of the county and that the fencing was in lieu of that.
He allegedly told gardaí he agreed to withdraw an invoice for €7,523 and pay the amount himself for fencing erected on his farm in 2003.
The trial had heard earlier that now-retired county manager Donal O'Donoghue had imposed sanctions and penalties on Cllr Fahy which included the €3,000 donation of the Lourdes Fund, and the withdrawal of his councillor's €14,500 Notice of Motion money for 2005, when it became apparent that there were irregularities with the invoices.
Mr O'Donoghue said Mr Fahy immediately repaid the €7,055 to the council which it had paid for works which had never been sanctioned in 2002 and had paid Byrne Fencing €7,523, which he had tried to get the council to pay.
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