Eleven Days of Hell

by Yvonne Bornstein

  Given the fact that we had deals like this on the table for staggering amounts of money (again, $23 million in all), Matthew Hurd again urged—demanded, really—that Danny and I return to Moscow, to personally review and finalise many of these deals with the joint ventures. We hadn’t been getting much information on the ventures lately from Matthew or Grigory, leading us to wonder if perhaps some of them might have been wavering, though we had no indication to that effect. And so we readily agreed to do the drill with Grigory and the boys, if only to put our minds at ease.

  When we landed from the long flight, we were met at the airport by Grigory Miasnikov and a disheveled man in his late twenties named Richard Markson, the son of a very wealthy Melbourne copper and steel importer who also was doing business with Grigory. Apparently, Richard was useful to Grigory, allowing him to put another Australian ‘face’ to his operation. On this, another warm and lovely day in Moscow, Richard ferried us in his beat-up white Lada Niva automobile to his apartment, where we were supposed to stay during the trip. However, the place was a cramped, dingy mess. Rather than give up his bed, Richard put us on a skinny couch and said good night. Neither of us slept a wink that night and the next morning we fled the apartment and booked a room around the block at the Sputnik Hotel near our SovAustralTechnicka office on Chekhova Street.

  Over the next two days, Danny and I bounced like pinballs between the hotel and the office, taking meetings with the joint ventures, but it was clear that Grigory had only a passing interest in most of these meetings. Also clear was the fact that Grigory had changed since our last trip here. He was snippier, less charming, and seemingly preoccupied. Even when he was talkative, which was rare, he spoke in riddles. If we asked him a question, he’d avoid giving a straight answer, instead navigating carefully around the fringes of the subject. You’d want to slap him and say, ‘Just answer the damn question!’ Now he was even more oblique and seemed not to want to look us in the eye. When we tried to ask about the profit margins of SovAustralTechnicka, he became nervous and evasive, never actually telling us.

  Still, things went routinely on our rounds. Most of the directors of the newer joint ventures, unlike a good many of the pre-Perestroika ones, seemed elated to be able to make money in the new Russian economy, even if they knew not a thing about business. One group, from Mongolia, sat in the Chekhova Street office almost afraid to say anything—which, of course, was the cue for Grigory to act like their master, doing all their talking for them.

  Another venture, Multicom, was co-directed by Nikolai and Olga Bondarenko, husband and wife, jolly, round-faced people with wide-eyed dreams of success, just as we were in the beginning.

  Grigory, though, could not be bothered to join in such revelry. He was almost entirely focused on one thing: a meeting with the joint venture from Vladivostok, Vostok. That meeting occurred in the lobby of the Sputnik Hotel shortly before we would leave for home, and it was then that we met the biggest cog in our business dealings: Mikhail Rud of the Vostok joint venture.

  That moment is burned into my mind because it was the precise moment that the house of cards on which our business was built began to collapse.

  Rud was a particularly prickly fellow. In his mid-thirties, around six feet tall, linguini thin, with unruly hair that fell over his forehead, he had a baby face but an empty soul. Not once did I see him smile. When he walked into the foyer of the hotel, he was accompanied by three equally dour associates. As a group, they had all the charm of a welcoming party from a funeral parlor. Though they wore cheap, ill-fitting suits instead of pinstripes and silk ties, they gave the impression of being old-fashioned gangsters who would kill in the blink of an eye.

  Rud nodded hello to Grigory, who introduced him to Danny and me, acting as Rud’s interpreter. Extending his hand, which felt like a limp dishrag, Rud was in no mood for small talk. He descended into a chair next to Grigory across a low marble table from us and began to speak with quiet intensity while sucking hard on a cigarette. From his first sentence, we knew that Rud was not happy. Something was wrong. We looked to Grigory to put whatever that something was in English, and when he did—seeming to anticipate what Rud would say before he ever said it—a rather unbelievable tale rolled out.

  It had to do with the deal we had made with Vostok in which they shipped from Vladivostok a large supply of fertiliser to our buyers in Taiwan. Rud’s people had valued the fertiliser—rather exorbitantly—at $1.6 million. But when it was delivered, the Taiwanese balked, insisting that the protective bags carrying the fertiliser had broken during shipping and that what had arrived was found after chemical analysis to be of inferior grade.

  How costly was it now that we’d had no one on the ground in Vladivostok and Taiwan to verify quality? The answer: about $1.6 million, or almost the entire value of the deal, since the Taiwanese had refused to pay more than $400,000. After expenses, that left Video Technology with a net profit of only around $50,000, peanuts, and certainly nowhere near enough to be able to fill Mr Rud’s wish list—the only phase of the transaction about which Rud cared.

  ‘Unacceptable,’ he said through Grigory adamantly denying he had sent tainted fertiliser to Taiwan.

  Rud sputtered that he’d been ripped off and was holding us responsible—even though of course we had been the ones who’d taken the beating on the deal.

  ‘Something has to be done,’ he said. ‘You must make good on the deal.’ By that, he meant we’d have to eat the loss and still get him his goods.

  Danny and I sat looking at each other, stunned. The free ride that we’d been on just became very expensive.

  A CONSPIRACY OF THIEVES?

  Could this bum deal have been Grigory’s handiwork? If he had been an undercover spy, and indeed had become a free agent after the fall of the Iron Curtain, could he have determined that this shipment, with its $1.6 million price tag, presented the best conditions for turning on his ‘partners’ and setting in motion his big score: a plot to extort the Weinstocks? If he was in fact the overseer of the joint ventures, could he have conspired with the execrable Mikhail Rud to pull off a ‘squeeze play’ on Yvonne and Danny, and frame them into eventually forking over a huge bounty—and not merely in goods but cold cash?

  Or, perhaps in Machiavellian style, could he have been playing Rud for a fool as well, stoking his demands from the Weinstocks while keeping up a pretense of loyalty to them—in effect, using his influence to embolden Rud and turn up the heat on Yvonne and Danny at the same time?

  Surely, Miasnikov’s increasing distance from the Weinstocks hinted at just such a hidden agenda. The most logical question was why Grigory had not bothered to inform them of this rift with Vostok. Grigory surely had to know about it for weeks now, being the point man for the business in Russia. And what about Matthew Hurd? He was the conduit between Miasnikov and the Weinstocks, the man on whose word they had brought in Miasnikov. Was Grigory keeping information from him, too? Or were they scheming together, double-teaming the Weinstocks? And was that Matthew’s plan all along, from day one?

  Yvonne and Danny were not in a position to confront either or both men about these scenarios, even if they had any cause to be suspicious. Naive as they were, a more important matter was that they smooth over the fissure with Vostok, and for that they needed Miasnikov. Without Grigory, the chain of trust would be broken with the joint ventures—putting the $23 million in deals in dire jeopardy. They were, as Grigory well knew, in the palm of his hand.

  Grigory may have been feeling the rush of that power when, in the lobby of the Sputnik Hotel, he posed a solution to the Vostok problem: Rud should present the Weinstocks with a new wish list of goods. Pacified, Rud seemed to uncoil a bit.

  He became less confrontational, and the conversation actually turned civil. Though our heads were still spinning, Danny and I were genuinely contrite that things had gone wrong with the deal and promised to make them right.

  You’re thinking: what a naive pair. And you are correct. We were. Rather th
an being consumed by doubts about this entire scenario, rather than putting two and two together and realising that it may have been completely contrived for reasons unkind to us, we were still blinded by money. And so we were eager to make good on the deal. If we could shepherd those $23 million in deals through, what would a $1.6 million loss be in the grand scheme of things? A bad deal. A tax write-off. A blip on the radar screen.

  On September 28, we came back to our million-dollar home with the $9000-per-month mortgage, ready to breed more money. Only now it wasn’t as easy. For one thing, economic conditions had worsened, which was beyond our control. In the early nineties, we felt the sting of the recession that had begun in the late eighties after the American stock market collapsed. That led to the devaluation of the American dollar worldwide. Of course, our main bank account in Hong Kong was a US dollar account, and the value of our assets sank as though in quicksand. Suddenly, it wasn’t as easy to pay that mortgage every month or to pay for our aggrandised lifestyle.

  Making money, then, was still our obsession, but it wasn’t only because we wanted to. It was because we had to.

  Once back home, we intended to stay put a while, to spend more time with the family we’d been neglecting to go globe-hopping. We’d seen too little of the kids, and it might have been taking a toll on them. A now-teenaged Romy, for instance, had become quite rebellious. This of course is a common theme of teenagehood, but some of it seemed to be directed at her parents—such as when we would come home and find that, after Romy had turned the house into party central, the furniture would be overturned and the swimming pool filled with empty beer cans. Danny’s oldest son, Jonathan, also in his teen years, began to act out as well, prompting Danny to throw his hands up and send Jonathan to America to live for a year with the brother of Danny’s late wife, Freda, DrIsrael Rayman, who with his wife, Wendy, lived in Wayne, New Jersey, a bedroom suburb of Philadelphia. Israel, or Ian as his friends called him, was a pediatrician and had a twenty-one-year-old daughter, Lisa. Lisa had just graduated from Syracuse University and was eager to see what the world looked like outside of America. Ian suggested she come and stay with us as a kind of ‘fair exchange’ program, and we thought it was a fine idea. Lisa, hopefully, would have a calming influence on Romy.

  However, because of the exigency of fixing the thorny situation with Mikhail Rud and Vostok, our pool boy put in more time at the house than did Danny and I. We were working overtime now, feeling out new investors in Video Technology, raising capital to make up for that $1.6 million beating we’d taken in Taiwan. Fortunately, the word of mouth about our success (we breathed a deep sigh of relief that the bad news hadn’t slipped out) created a virtual stockpile of investors, as well as potential partners in Russia. Things were still on track. The big picture looked bright.

  And then came a dark cloud. Two dark clouds, to be exact.

  First, there was Matthew Hurd. He had gotten less and less responsive, to the point that we were now relieved when he took off on his periodic trips to Moscow. ‘Let’s hope he stays there for good this time,’ Danny and I would tell each other. Unfortunately, he always came back, and he even bought a house in ritzy South Caulfield, which we congratulated him on—until we found out how he bought it.

  Back in July, when Danny and I had taken the family on a vacation to Surfer’s Paradise, we left our accountant, Albert, four blank, signed cheques, specifically to be used only for petty cash and to pay the salaries of office employees. (All monies for the shipping of goods came from the Hong Kong account.)

  That was our normal procedure, and, again naively, we thought little about it.

  After we returned, though, our accountant in Hong Kong, an eagle-eyed Chinese man named Alan Cheung, had some distressing news for us. After going through the company’s books, he’d found a slew of discrepancies; in effect, well over a hundred thousand dollars had been taken from the account, with no explanation as to where it went.

  I gulped hard when hearing this, as it meant we were in even worse shape financially than we had reason to believe. It also meant there was a quisling within the ranks. But who? Knowing that no one could be trusted—not Albert, not Matthew, no one beyond Danny and me—I quietly began to do my own detective work, with only Alan aware of what I was doing. First, we pored over all the financial statements from the Hong Kong account for the previous eighteen months.

  Although Danny and I, as executive directors of Video Technology, were the only ones authorised to sign cheques, Matthew—forbidden to do so as general director—had over that time period called Alan more than a few times insisting he needed cash to cover shipments and the purchasing of goods. These requests were at first small, then kept growing larger, and a few could not be accounted for—including a good number of payments wired to Austria, which we originally figured were to cover goods shipments of some kind.

  Next, I went through all of the canceled cheques over that time period and found one in the amount of $131,000, payable to Citibank of Melbourne. Doing some more gumshoe work, I found out what the price of Matthew’s house had been. It was exactly $131,000. I had found the smoking gun. Even so, I had a hard time convincing Danny that this evidence was definitive. He had always been far more enamored of Matthew than I was and reluctant to confront him. Indeed, I often felt as if I were the one wearing the pants between us. And on this matter, I was unyielding: We needed to cut this cancer out of our business.

  ‘Okay,’ Danny said, not wanting to fight me, ‘let’s do it.’

  MATTHEW’S SIDE TRIPS

  What the Weinstocks didn’t know, and would not know until much later, was that a secret bank account in Vienna had been opened two years before and was being well-fed with funds siphoned from Video Technology Ltd’s accounts in Hong Kong and Moscow. The owner of the Austrian account was an Australian, who would wire money from Hong Kong or Moscow. Several times, he had come in person to the bank, accompanied by a Russian. He would sign the deposit slips, complete the transaction, crumple up his copy of the receipts, then throw them into the wastebasket.

  Technically, we couldn’t just fire Matthew; as a director, he could only be removed by a formal vote in a meeting of all three directors. We organised the meeting for October 1, at the office of our attorney, Joe Krycer, in the Melbourne suburb of St. Kilda. Matthew had no idea what was afoot. Believing it was a routine matter to vet contracts, he sat down at the table in the conference room, sipping coffee with not a care in the world. Then we came in with Joe, who pulled out the cheque to Citibank.

  ‘Matthew,’ Joe began, ‘about this $131,000 …’

  Matthew almost spit up his coffee. The look on his face seemed to be saying: ‘Uh-oh.’

  Clearly, he was shocked that we had found him out. For two years, he had assumed not only that we were bumpkins but that we were in his thrall. He sat rigidly in his chair, trying to remain outwardly cool, emphatically denying he had misappropriated company money. Eventually, he became belligerent. ‘You two,’ he said, red-faced, his voice rising, ‘aren’t the reason this company is a success—I am!’

  But he knew the final act was here and that he couldn’t rewrite the ending. Joe asked for a vote on removing Matthew as a director. At ‘All in favour,’ Danny and I raised our hands. Matthew didn’t bother to raise his as ‘All opposed’ was called. It was over.

  Joe told Matthew he would have to leave the building immediately. He gathered up some things on the desk, and Danny, Joe, and I walked him downstairs, no one saying a word as our footsteps echoed in the stairway. For Danny and me, it was a terribly sad moment, in that Matthew had indeed gotten us to where we were—but also, it could be argued, to the brink of bankruptcy as well. Again much more than Danny, I was angered that Matthew had so abused our trust and played us as easy marks in a con game. In fact, if not for my adamancy, I’m not sure Danny would have ever sacked him.

  Out in the parking lot, Matthew began to climb into his car, a Holden Calais we had bought for him to use as a company car.r />
  ‘Just one thing,’ Joe told him. ‘Please hand over your keys to the office and the company car, and your company mobile phone.’ Matthew, turning scarlet, took the key off his key ring and pulled out the mobile phone. Again he began to get into the car.

  ‘Matthew,’ I said, ‘the keys to the car, too.’

  ‘And how am I supposed to get home?’ he asked.

  ‘The bus stop’s on the next corner.’ I didn’t mean to be nasty. But after the damage he had done, I wasn’t about to let him sneak away in that beautiful car.

  And he knew there was no card left for him to play. Utterly defeated, he gave up the key. Then, glaring at Danny and me demonically, he took his parting shot: ‘I’m going to crucify you.’

  As relieved as I was to have gotten this over with—I’d been unable to sleep the night before thinking about it—the threatening words barely resonated. I even had some pity for him. I thought, he’s angry, he got caught, but he’ll get over it.

  In fact, we had more pressing things to worry about. With Matthew having looted the company, Danny and I had to confront the reality that Video Technology Ltd. was teetering on the brink. That $23 million bounty we were relying on to make things all better was now hanging by a slender thread.

  Worse, with Matthew not around to screen all the calls, people whom he had never put through to us before were telling us now that Matthew had made outlandish promises to the joint ventures. To some he had even promised cash payments, something that was never part of our arrangement with the Russians. ‘Where’s the money?’ they wanted to know. We tried to explain how Matthew had worked at cross-purposes with us, but it mollified nobody. ‘We’re getting everything together,’ we’d tell them all. ‘We’re going to get it done. In the end, there’ll be more than enough to go around for everybody.’ And, of course, Mikhail Rud was becoming ever more impatient about getting the goods on his wish list. He also couldn’t have been happy that, although he had given us a photograph of himself during our last meeting with him in Moscow so that we would use it to get him a visa to go to Hong Kong and personally look over the goods he wanted, we felt we owed him no such favour. If he was steamed about it, we said, tough.