The investors: Frank Fahey was described as the promoter and part-owner of Tressals hair salon in a document sent to Riada Corporate Finance. At the time Riada was preparing an information document for potential investors in Irlasto.
On April 31st, 1994, Aine O'Grady of Irlasto sent a fax to James Kenny of Riada and included profiles of six Irlasto businesses, including the Tressals hair salon. The Tressals profile said it was due to open the following week. "The business is promoted by Senator Frank Fahy (sic) and will be managed and supervised by Michael O'Connor, an experienced hair salon operator from Galway."
The profile outlined issues to do with staff and said the business was undertaken "following a six-month study of the hairdressing business in Moscow where it is extremely difficult to get appointment for western style salons". Prices ranged from $50 for basic cuts for men, to $100 for women, the profile said.
"The business is 55 per cent owned by Mr Fahy (sic) and his partner, 25 per cent by DVA and 20 by Irlasto plc. Each of the three parties will receive a 5 per cent management fee with the remainder of the profit being distributed in accordance with the above shareholding." Turnover is projected at $1.5 million and profits after management fees at $200,000, the profile stated.
On November 24th, 1994, Mr Fahey's wife, Ethelle, signed a verification document for Riada, stating that Tressals was a hair salon in Moscow and that Irlasto had a 22.5 per cent stake with the balance held 22.5 per cent by Russian partners DVA, and 55 per cent by "the promoters".
Ms Fahey had been written to a week earlier by Garry Quilligan and Aine O'Grady of Irlasto. Their letter was to "Tressals Ltd, c/o Ethelle Fahey", in Gort, Co Galway. It began: "Dear Ethelle, As you are aware, Riada Corporate Finance are in the course of preparing an information memorandum" and asked her to sign certain documents.
A covering note accompanying the letter read: "Dear Mrs Fahey. Please find the enclosed which requires your signature as soon as possible. I spoke to Frank regarding same and if you have any queries feel free to call me. Regards, Garry Quilligan."
A further note on the compliment slip read: "Garry. Please confirm if the identity of the investors will become public knowledge. Frank."
The memorandum produced by Riada did not disclose the investors in Tressals. It stated the profits made by Irlasto group operations in the nine months to end of September 1994, totalled £902,000 and that no tax was paid. The document warned of the dangers of investing in Russia.
The memorandum said the Irlasto directors at the time were: chief executive Kieran Walshe; deputy chief executive Michael Coughlan; non-executive director Hugh Murray; and non-executive director Michael Ryan. Mr Murray is an architect with Murray O'Laoire architects, Limerick, and is a brother of the Chief Justice, John Murray. Mr Ryan is a former banking executive.
The Riada document said Mr Walshe owned 13.5 per cent of Irlasto, Irlasto founder John McCarthy owned the same, and Mr Murray owned 7.63 per cent.
The risk factors highlighted included that of taxation. The document said Irlasto's advisers were satisfied the Cypriot companies were resident offshore and not in Ireland.
However, the issue of exposure to Irish tax on offshore profits could be the subject of a future audit, it warned, "particularly in view of the close relationship between Irish resident individuals and these companies".
