The taxpayer has bailed out a fund designed to bring the "best and the brightest" American students here after it lost almost $1m (about €730,000) on the stock market.
The George Mitchell Scholarship Fund was set up 13 years ago with a IR£2m grant from the Government. Its aim was to recruit talented American students who were likely to occupy "positions of influence in the US" in the future and would feel more "goodwill" toward Ireland as a result of studying here.
But the US-Ireland Alliance, which runs the fund, admitted that the fund had been hit by "market fluctuations" that saw its value drop from $2.76m to $1.79m.
"This represents a deficit of $971,167 (€726,418) on the original value of the fund," its recently published annual accounts for 2009 said.
In a move that drew little attention, the Government brought forward legislation last year to provide up to €20m to the George Mitchell Scholarship Fund over the next five years -- as long as it secured matching funding from the private sector. Last October, it paid over the first instalment of almost €1.5m in return for the scholarship fund raising a similar amount privately.
Independent Senator Fergal Quinn was one of the few who questioned whether the move was worthwhile -- given that just 12 American students were being brought over each year.
"The world had changed and the Irish economy had changed this year. Twelve people does seem rather a small number of people for us to be spending that amount of money on," he said.
The 12 US students here now get free tuition and accommodation from the universities they are attending, north and south. The scholarship fund provides them with a living expenses grant of $11,000 (€9,485) each, while they also get a grant of up to $2,300 (€1,717) to travel around Europe during their stay.
The fund is named after former US Senator George Mitchell, who played a key role in negotiating the Good Friday Agreement in the North and is now working as US President Barack Obama's special peace envoy in the Middle East.
The operator of the scholarship fund is the US-Ireland Alliance, which was set up in 1998 by Trina Vargo -- the former foreign policy adviser to the late Ted Kennedy. She defended the fact that just 12 students were being brought to Ireland annually by the fund.
"It is not the case that €1.5m is being spent in a year on 12 scholars. The Alliance objective is to raise a $40m endowment which can be invested conservatively so that this programme continues, like the Rhodes Scholarship, forever," she said.
Ms Vargo said it was "absolutely" the case that the George Mitchell Scholarship Fund was needed to maintain the waning Irish influence in the US.
"Irish influence in the United States is greatly exaggerated by a handful of people for purposes of self-aggrandisement. But the emperor has no clothes. For example, there is simply no such thing as an 'Irish vote' in America," she said.
Ms Vargo said a new US-Irish relationship had to be built on the basis of culture, education, and business and "not leprechauns and green beer". She also said that the fund had managed its investments prudently, but had been hit by the market crash in 2000 and the downturn in 2008.
"We continue to manage our endowment with the benefit of professional advice, seeking a prudent strategy that will promote a reasonable return with an acceptable amount of risk," she said.
The annual running cost of the fund dropped from more than $100,000 (€75,000) in the early years to just under $17,000 (€12,700) last year.