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Myron Spolsky has returned all but $5,000 of the money that was in his custody as treasurer of the Kyiv Multinational Rotary Club.  He claimed that the finances were incredibly complex, and auditing them meant that he had been unable to return the approximately $50,000 between the end of his term, June 2010, and now, August 2012. 

What brought the audit to a conclusion?  Brute force, Ukrainian style.  The KMRC directors got the Kyiv Post to publish an article in October, 2011 exposing the fact that the money had been unaccounted for more than a year.  Subsequent articles kept the heat on.  Finally, four officers of KMRC cornered Spolsky in his office and refused to leave.  When Spolsky threanted to call the police, they invited him to do so.  Spolsky backed down.  The four would not leave without some collateral for the money owed, which took the form of Spolsky’s soon-to-expire passport. 

The Canadian Embassy was properly embarrassed that a prominent member of the Canadian-Ukrainian community would behave in this way.  One assumes that they would not issue a new passport knowing the circumstances under which Spolsky lost his old one.  They stopped serving Spolsky’s pizza at embassy functions.  Moreover, other Canadians close to the embassy probed for, and found, irregularities in other charities in which Spolsky was involved.

The affair appears to be wrapping up.  Let’s assess the damage.

Spolsky’s lies split the Rotary Club as early as 2009.  Several members found his excuses for being slow to repay members who had advanced money on behalf of the club to be suspicious, and demanded an audit.  Spolsky claimed to be spending a lot of time in Uzbekistan working on a rare-earth metals deal, and made up elaborate stories about his activities there.  He sent frequent SMS from an Uzbek mobile phone.  However, some members saw him in Kyiv when he was supposedly in Uzbekistan. 

The Uzbekistan stories were intermixed with hospital stories.  He supposedly had some elaborate heart operation which kept him incommunicado for weeks on end, sometimes at sanitoria far away from Kiev, sometimes in the city.  He arranged some charade whereby club members visited him in a hospital.  The net of it was that for the entire period of January 2010 through well into the summer he was never available for an audit.  Once again, there were glaring contradictions.  A club member saw him power walking with his wife on a day when he was supposed to be in the hospital.

An audit starts with a look at the accounting records.  Spolsky kept them in Excel.  Given that he was on Facebook just about every day, it is abundantly clear that he could have allowed the club to start an audit by simply emailing the spreadsheet.  It would have taken a minute.   He never did this, and never offered a reason for not doing it.  Instead, he stuck with the story that he could not be physically available to open his safe and show us the money.  But without the accounting records, we would have had no idea of whether the amount was right or not.

We will soon be able to see how complex the books were for 2009-10.  For 2010-11 there were about 200 transactions altogether and the audit took perhaps four hours.  It would not be a stretch to say that the claim of “incredible complexity” accounting for the two year delay is also a fabrication.

Spolsky himself is severely damaged.  His reputation in Kyiv is shot.  It appears unlikely that any organization will extend him credit, which is the life’s blood of a small business.  It will make it hard to expand to compete with Celantano, Mafia and other pizza chains.  He has lost the friendship, support, or at least presumption of affinity with the expatriate community.  And… after all his valiant efforts to hang onto the money in his custody, he had to give it up.  He gained nothing, lost everything.

Spolsky showed no embarrassment as his lies unraveled.  He simply invented new ones.  If Uzbekistan, or the hospital, or out-of-town visitors or whatever had been a true reason he could not meet with us, then the subsequent story of “completing an audit” would make no sense.  That should have been the first story.  He lied like a child, without guilt and without any effort to keep his lies consistent.  The litmus was loyalty.  The test of a loyal friend is that he will support you whatever stories you tell.  Half the club remained loyal to Myron for six months and more.

The other half of the club left.  Angry words were exchanged over the need for an audit.  Membership fell by more than 50%.  Attendance at the club’s 2010 Midsummer Night fundraiser was meager; in 2011 the club did not even hold the event.   Today the club is rebuilding slowly with new members.  None who left has yet returned.

It is hard to know how many premature children could have been saved had the $50,000 been used to place incubators in hospitals two years ago. 

Samuel Johnson wrote that “Patriotism is the last refuge of a scoundrel.”  Spolsky is a loud patriot, browbeating any club member who might by accident use the Russian “pazhalucta” rather than the Ukrainian “bud laska” for “you’re welcome.”  Spolsky will be forever associated with Ukrainian patriotism, my attitude towards which has certainly fallen.  I’m increasingly indifferent to whether Spolsky’s set of crooks or some other is running the place. 

A country’s wealth depends greatly on the trust that exists between its citizens.  Even where courts are fair, a businessman has to depend on the basic honesty of his partners.  A person cannot make any money if he must constantly be on the defense against being cheated.   The basis of honesty is telling the truth.  In a country where people lie as openly and artlessly as Spolsky, who can put faith in a business partner?  How can a bank make loans if they cannot trust what is written on a loan application?   How can a grain exporter contract to buy corn if he cannot trust that it exists?  Concluding that it is impossible, more and more Western banks and businesses are simply pulling out of Ukraine. 

The West long ago learned the value of enlightened self-interest.  A reputation for honesty is more valuable than any amount of money.  A trusting business relationship is more valuable than whatever is to be gained by exploiting a partner in a single transaction.  Until Ukraine learns the lessons of trust and honesty, it will remain mired in its past, unable to build a modern society. 

Comments

( 2 comments — Leave a comment )
Lidia Wolanskyj
Mar. 24th, 2018 05:41 am (UTC)
Spolsky the shyster
Let's start with one terribly disingenuous thing about this post, starting with the headline: Spolsky is not Ukrainian, he's Canadian. So making this a "Ukraine is awful" story is really low. Spolsky cheated me when I sold him Eastern Economist in 2003. When I went to the Canadian embasssy as a Canadian and asked for support or that they at least stop serving his pizzas, I was ignored. "We don't get involved in that kind of thing." Kyiv Post wrote an article that essentially accepted Spolsky's interpretation of events and left out comments from me that showed that he was lying. When I told others in the Canadian community about what had happened, several stories came out about how Spolsky had cheated them in real-estate deals back in Winnipeg! He doesn't necessarily plan to swindle people every time, but when something goes wrong for him, the other side is left holding the bag. Too bad it took the Rotary Club scandal to finally force all these folks to pay attention. How sad that all his other victims have been ignored for decades and will never be recompensed.

Edited at 2018-03-24 08:51 am (UTC)
ukraine_eureka
Mar. 24th, 2018 01:01 pm (UTC)
Re: Spolsky the shyster
Yes, despite his loud protestations about how Ukrainian he is Myron is a Canadian. The other members of the club who disgraced themselves in this affair were mostly also foreigners. The Swiss guy who defended Myron to the bitter end, and then the Dane who has defended the Swiss guy. Search on "assessment of Dirk Lustig"for an account of the rest of the story. The people who defended Myron absolutely refused to give up until the bitter end. They all turned it once, like a school of piranha, against Myron, pretending that they were absolutely innocent themselves and had been all along. Of course they had been protecting him.

This came to a head in December 2015 when I was president of the club. The above-mentioned Dirk Lustig had not paid his dues for 2 1/2 years. The Dane in question, Jesper, claimed that it must be a bookkeeping error. Since I had been the treasurer over this period and knew the books backward and forward, this was a personal affront. Dirk had not paid the money and Jesper was covering for him.

So far the story involves all foreigners. The Ukrainian share of the disgrace is minimal. A few Ukrainian officers refused to bar Dirk from rejoining the club. I have to say that the Ukrainians in other Rotary clubs were quite shocked at the events in our club. The leadership in Ukrainian Rotary clubs is really pretty honest and competent. It was the foreigners who did this club in.

Let me repeat, I think you will be amused by doing the Internet search I recommend above. It adds another four years to an already sad story.
( 2 comments — Leave a comment )