INDEPENDENT TD Mick Wallace received a €120,000 out-of-court settlement for wrongful arrest, it has emerged.
The tax-cheat politician sued the then Justice Minister and Garda Commissioner following the incident in September 2000.
Mr Wallace took the action after being arrested for a public-order offence in Dublin on September 27, 2000.
Sources have revealed that the State Claims Agency paid out a sum in the region of IR£100,000 at the time after settling Mr Wallace's claim.
Mr Wallace, who has been locked in combat with current Justice Minister Alan Shatter over penalty points for the past week, did not comment on the payout.
It is claimed that the incident involving wrongful arrest occurred when Mr Wallace, who was then a successful multi-millionaire developer, was directing traffic on the corner of Thomas Street and Meath Street in the south inner city, where his company was involved in construction work.
It is understood that one of his machines had knocked out the traffic lights, causing a snarl-up on one of the busiest roads in the south inner city.
It was claimed that Mr Wallace continued to direct the traffic and ignored repeated requests from a garda to stop.
The officer believed that Mr Wallace was making the traffic problem worse and that he potentially posed a safety risk to both himself and motorists.
The garda reportedly told him he would be arrested and it was claimed that a scuffle ensued when Mr Wallace resisted the garda's arrest attempt.