The incident took place in 2005 after Mr MacNeil was elected
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The MP who sparked the cash-for-honours inquiry has apologised for a lapse of judgement after a newspaper said he had a "drunken romp" with two teenagers.
The Sunday Mail reported that the SNP's Angus MacNeil "kissed and fondled" the girls in a hotel room in July 2005.
The Western Isles MP said he bitterly regretted the incident which took place at a post-ceilidh party in Shetland.
He said he was angry it had diverted attention from the "substantial political issues" he had been pursuing.
In a statement, Mr MacNeil, 36, apologised for the "embarrassment and hurt" caused to his family by his actions.
The incident with the girls, who were aged 17 and 18 at the time, was reported to have taken place two months after he was elected in the 2005 general election.
The newspaper said it happened after the Shetland Island Games, just weeks before Mr MacNeil's wife gave birth to their child.
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Yes, some foolishness took place at a post-ceilidh party, which was wrong and stupid
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His statement said: "I bitterly regret that this incident occurred, and I apologise to my family for causing them embarrassment and hurt.
"I also apologise to the young women involved and their families. I really should have known very much better.
"Yes, some foolishness took place at a post-ceilidh party, which was wrong and stupid.
"There is no allegation that anything further happened and I wish to make that absolutely clear. It was a lapse of judgement two years ago, for which I am sorry."
He added: "I am really angry with myself for allowing a Labour-supporting newspaper the opportunity to divert attention from the substantial political issues which I have been pursuing.
"However, in the interests of everyone concerned I have nothing further to say on this matter."
A complaint from Mr MacNeil a year ago prompted police to begin investigating allegations that money was being loaned to Labour in exchange for peerages.
The cash-for-honours inquiry continues. No-one has been charged and all involved deny wrong-doing.