The Department of Environment, Food and Agriculture says it allowed the Castletown Golf Links Hotel to be demolished without planning permission because the building was dangerous.
A Freedom of Information request asked about the Fort Island work, claiming it would affect birds such as Choughs, Wagtails and Sparrows.
In response, the department confirmed no planning permission had been granted to pull down the hotel - which closed in 2007.
But it said the work had gone ahead after an assessment found it was necessary for safety reasons, and DEFA had told developers they could apply for permission afterwards.
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