The Sinn Fein councillor, who didn't turn up to the launch of the event in Irvinestown on Friday night because he didn't get an invite, has been heavily criticised by Mr. Mahon.
"What he said really annoyed me - the festival has been going for 34 years and the programme suits everybody. He said he didn't know anybody from Erne East that attended the Lady of the Lake. I told him that Liam Connolly, from Lisnaskea, brings 20 lorries and supporters every year. I told him that people from all over Northern Ireland visited the festival. I didn't realise I had to invite him. After all the tourists we bring into Fermanagh you would have thought the chairman of the council would have been there," he stated.
Asked to clarify this comments yesterday, Mr. O'Reilly told us: "I said I didn't know anybody that went down to Lady of the Lake [from Erne East]. I said that to Joe and he got all tickled about it. But that's all I said. I think it's an absolutely brilliant festival and have been going to it for a few years. It is a wonderful festival and is so well organised and run by a small committee of dedicated people."
Asked why he thought people from Erne East weren't going to the festival, like he claims, he replied: "No idea" and added: "I don't know. It's up to people to go to wherever they want to go themselves... I don't know. For all I know, hundreds of people go from the Erne East area... I have no idea. All I said to Joe was, I didn't know anybody who went."
Mr. O'Reilly said he didn't attend the launch on Friday night in his role as chairman because he "had something else on". In a phone call later, he added: "I didn't get an invite".
But Mr. Mahon's issues don't end there. He says he is also annoyed that Tourism Minister Arlene Foster didn't attend the launch of the festival's annual charity truck convoy in Belfast.
The Fermanagh and South Tyrone MLA was unable to attend the event in May due to diary commitments.
"She was invited to the launch of the truck convoy. I was disappointed that she didn't come to the launch - the truck convoy is one of the biggest events in Europe and she's the Tourism Minister," he said.
As the Lady of the Lake Festival reaches its climax on Sunday, Mr. Mahon says he is thankful for the support he does get from public representatives. However, he believes more should be done to support the cross-community venture and indeed, other, smaller events in Fermanagh.
"We get a grant from the council for £1800 and Waterways Ireland give us £1000. But it costs us over £20,000 to run the festival. We gather the money up ourselves from sponsorship, advertising and from local traders. The festival is a big success locally, but if we got a few pounds towards running the festival you could make it an even bigger event.
"Fermanagh needs support too, not just Belfast. I think tourism is about people. Small community festivals are important and are needed to bring in tourism," he said.
Asked for her view that not enough is being done to promote Fermanagh, Arlene Foster MLA, said: "Just last week 20,000 people visited Enniskillen to attend the flagship Twelfth parade. In an historic first, I along with First Minister Peter Robinson, hosted the Republic of Ireland's minister responsible for tourism, Leo Varadkar. During his visit, he also had a chance to take in the breathtaking scenery of Fermanagh on board the NI 2012 branded MV Kestrel boat."
Mrs. Foster described this as "another excellent shop window for Fermanagh", adding: "It followed on from the wonderful event earlier this month when Enniskillen hosted Her Majesty The Queen, which was beamed across the world.
"NI2012 has supported a large number of events throughout Northern Ireland, including the Beckett Festival and the Clogher Valley Show, however festival scale events funding was devolved to local government during the last Assembly term," she said.