Business deals in Russia often involve Mafia

 

Setting up of Moscow hair salon: In 1994, when Frank Fahey was a senator on a salary of £19,486 per year, he became involved in a project to set up a £200,000-plus hair and beauty salon business in Moscow.

A group of Irish businessmen had established a company in Limerick - Irlasto - which in turn assisted investors who wanted to become involved in the Russian market. The newly opening market held out the prospect of very attractive returns, especially from the perspective of early 1990s Ireland.

However, becoming involved in business in Russia was complicated and dangerous, involving as it did almost inevitably interaction with the Russian Mafia.

Irlasto had teamed up with two Russian men, Dmitri Kishiev and Victor Shenkov, who had a company called DVA. According to a number of sources, Mr Kishiev has close relations with one of the most powerful of Moscow's criminal gangs.

The cost to the investors of establishing the salon was not small and in a document seen by The Irish Times, Kieran Walshe, chief executive of Irlasto, said it was $300,000. A lot of the materials used were brought from Ireland, as were some of the workers who worked on the project.

The premises were in a Moscow landmark building opposite the Kremlin known as the House on the Embankment. It seems key money had to be paid to secure the premises.

A fax from "Dmitry/Victor" dated June 1st, 1994, to Mr Walshe and his Irlasto colleague, John McCarthy, said payment of $45,000 "should be made before 10/06/94 to the account as under for the premises of the hairdressers. If that is not sorted out before 8/06/94, I am not sure that we shall be able to have that premises."

The account given on the fax was that of the "Rocket Electronics Corporation", with an address in Delaware. The account was with the Hong Kong and Shanghai Banking Corporation, Singapore. A note scribbled on the fax said: "DVA to pay half."

Another fax from Mr Fahey to Mr McCarthy involved some scribbled cashflow projections. Mr Fahey presumed five Irish staff and an unquantified number of Russian staff. "Consultants" were to be paid $5,000 a month. Other more detailed projections were also worked out about this time by Michael O'Connor, a Galway-based hairdresser who runs the Belissimo salons in Galway and Limerick.

A number of faxes and letters from Mr Fahey to the Irlasto management and to the Russian partners, involving detailed aspects of the Tressals project prior to opening, have been seen by The Irish Times.

A note to Noel Daly, manager of the Bank of Ireland, Eyre Square, Galway, from Maurice Hartery, of Irlasto, dated March 29th, 1995, stated: "Re Frank Fahey. Dear Mr Daly, This is to confirm that relevant contracts are now in place for Mr Frank Fahey's overseas operation and he will be in a position to transfer funds late next week."

In July 1995 Mr Fahey wrote to Mr Schenkov regarding "payment of $17,400 which is due to me from DVA for the extras involved in the construction of Tressals Hair Salon . . . I am under severe pressure as I borrowed this money personally last September. If there is any possibility that you can forward this money to me, I would be most grateful."

A note from Mr Fahey, dated October 21st, 1994, to Mr McCarthy, stated: "Dear John, Further to our telephone conversation, I wish to confirm that the 55 per cent shareholding in Jolerino Ltd, which is the holding company for Tressals, is held by Michael O'Connor, Cross Street, Galway, and Ethelle Fahey, Gort, Co Galway." Mr Fahey maintains that his wife was the investor in the project.