Document claimed salon had $1m turnover in first 22 months

The business: The Tressals hair salon had a turnover of more than $1 million in the first 22 months it operated, according to a document faxed to Mr Fahey. The document was drawn up by someone in Tressals and faxed to Mr Fahey in 1996.

The salon traded for approximately 22 months under the original arrangement set up for it. After it was taken over by the Russian partners, Mr Fahey was involved in seeking to secure the return of the business or the Irish investment in it.

Another document drawn up by Mr Fahey's business partner, hairdresser Michael O'Connor, prior to the opening of the salon, envisaged an annual turnover of $1.6 million.

Mr O'Connor's projections presumed 21 hair stylists doing 0.5 clients per hour, nine hours per day, five days per week at $60 per person. It also presumed two beauticians doing one client an hour, eight hours a day, five days per week at $40 per person.

The salon opened in September 1994. An unsigned document addressed to the Russians and the Irlasto executives says "the present weekly breakeven position for Tressals is $10,560. This figure does not include taxes which are estimated at $2,500. The investors have now made an investment of Ir£208,000." Average weekly turnover is recorded as being $8,000. "This represents a significant loss which cannot be sustained."

A page attached to this document and faxed from the Department of An Taoiseach in November 1994 includes a number of written notes, including: "Irlasto/DVA $45,000. Frank £120,000 - capital. Irlasto/DVA $20,000 advert. 55 Frank. 45 Irlasto/DVA."

Minutes of a meeting on July 26th, 1994, in Moscow, attended by Mr Fahey, Dmitri Kishiev, Victor Shenkov, John McCarthy and an Antonina Blouzkina, record Mr Fahey updating the meeting on progress with the salon project. "Frank Fahey asked if he would be paid for his time at the project. Victor Schenkov said that this issue must be discussed at their next board meeting with Kieran Walshe."

In November 1994 Mr Fahey wrote to Irlasto director Mr McCarthy concerning money. He asked that $26,000 be transferred to the joint account of Ethelle Fahey and Michael O'Connor in Bank of Ireland, St Stephen's Green, Dublin, and that he be informed afterwards. "A further $10,000 is now due to be transferred. I would appreciate if you would make arrangements for the transfer of this money from Cyprus. As you are aware approximately $60,000 has been lodged in the supermarket account from Tressals and to date none of this money has been transferred to your Irish account," wrote Mr Fahey.

In May 1996, at a time when the Russians had taken over running of the salon, Mr Kishiev wrote to Mr Fahey. "I fully understand that you as investor wish to have your money back and the same applies to me and other investors. I made an exercise and came to the conclusion that currently Tressals is making $60,000 per month and after all costs are paid there is $20,000 left. Therefore I feel it is possible to pay the rent and to repay you your money."

The billionaire property developer Seán Mulryan was named in a letter written by Mr Fahey in 1996 as having attended a meeting in Moscow where the Tressals project was discussed. A spokesman for Mr Mulryan said he was not at any such meeting. He said he was not an investor in Tressals, and had never provided any funding towards any Russian venture.

He said Mr Mulryan had at one stage considered a commercial development in Moscow in partnership with Irlasto, but had not proceeded with the project. Mr Mulryan had attended one meeting in Moscow to discuss the project but that was it.