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. Last Updated: 07/27/2016

'Shredded, Ignored, Exiled ... and Penniless'

Today Matthew Maly is unemployed and "penniless." He says his wife thinks he is "an idiot," and she has moved back to Kiev with their children, ages 2 and 7.

"I write the U.S. ambassador to say I can't feed my children, and he writes back, 'Thank you for your interest in our national defense'!" Maly practically shouted over the telephone last week.

For Maly it fits the pattern. As he sees it, he has a history of telling uncomfortable truths and then getting beaten up for doing so.

In 1994, for example, Maly was at Deloitte & Touche in Moscow, working on a business development project funded by the U.S. Agency for International Development. At the time, USAID Ч the American government's main foreign aid distributor Ч was dealing with a tempest in a teapot: The Moscow Times had just broken the story that USAID's Moscow director was living in an unusually swank apartment.

Maly said that soon after, a fact-finding delegation from the U.S. Congress arrived, sending USAID officials scrambling. As it happens, Maly had on the side written a small book called "Understanding Russia," aimed at advising Westerners how to do business here. USAID decided to publish it under the Deloitte & Touche Enterprise Development Project Ч and to do so in a hurry, for the incoming fact-finders.

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"They said, 'Publish this book in 48 hours.' That's why there are all these typos: I couldn't even have it spell-checked," Maly said.

Maly said copies of the book were spread out on a table in one of the rooms the delegation visited Ч offered and accepted as concrete proof USAID was making things happen. But after the Washington visitors left, he said, a top USAID official in Moscow finally got a chance to read the book.

"They said, 'It says 'mafia!' It says 'corruption!'" he said. Two American women from USAID were sent to Moscow's bookstores to buy up all copies of the book and shred it, he said. He said they also tried to buy all of the copies Maly had in his personal possession. "I said, 'Sure! I have five copies of the book. I'll sell them to you for $16,000 each.'"

This account of how USAID published and then shredded Maly's book was confirmed by two others with direct knowledge of the events: A former USAID official in Moscow and a former Deloitte & Touche employee on that business development project. The USAID press office in Washington could not confirm the incident.

Three years later, Maly was in the DEF's Moscow office, where by his account he worked under Americans who were playing golf at the country club and building a disastrous portfolio.

In August 1997, Maly went into the office of the DEF's Moscow chief, Richard Nordin, closed the door, and told Nordin the DEF was on a path to collapse. Maly said he reiterated previously expressed concerns Ч about a lack of due diligence, about unqualified and inexperienced investment personnel and other problems.

Nordin remembers it differently. "I do not recall him 'complaining' about anything, except for not being given more responsibility," he said.

Immediately after, Maly was sent to run a project in Kiev. He says that for the next two years Ч right up until he wrote his whistleblowing letter to the State Department Ч he received not a single business communication from Nordin. He was also passed over for six-month work evaluations and salary reviews, although reviews and raises were parceled out among other DEF project managers. Maly calls it his Kiev "exile."

Nordin said Maly was sent to Kiev "because we had nothing that fit his skill set for him to do in Moscow or the U.S.A." And he said Maly was in daily communication with his Kiev-based supervisor.

The next two years saw the Russian financial crash and then the DEF lay off its staff. In July 1999, Maly wrote to the U.S. State Department asking that they investigate whether the DEF was mismanaged, or worse. He says that Ч as with his shredded 1994 book that warned of corruption, and as with his August 1997 audience with Nordin Ч the government again punished the messenger.

Two weeks after Maly's letter, DEF workers were told Maly had written a false letter about the fund that would tarnish the reputations of all Ч and make it harder for them to find future work.

We'll Getcha Mangled

The State Department response to Maly's letter was to agree to let the DEF board hire its own law firm, Weil, Gotshal & Manges, to investigate.

Weil, Gotshal & Manges is a high-power New York firm nicknamed in legal circles "We'll Getcha Mangled." Through one of its partners, Robert Odle, it some years does hundreds of thousands of dollars in legal work for various Enterprise Funds, including the DEF. (Odie talks about his enterprise fund work.)

Odle and Nordin declined to discuss what the DEF had paid in legal fees over the years. (Nordin did volunteer that the largest single billing Weil, Gotshal & Manges had ever handed the DEF was for investigating Maly's allegations and talking to journalists about them.)

But Maly wondered how Weil, Gotshal & Manges could conduct an impartial investigation. After all, they had a good thing going with the DEF Ч would they really want to jeopardize future business by siding with a "whistleblower?"

Weil, Gotshal & Manges counter that they had orders from the DEF board Ч a group of unpaid volunteers who provide oversight for the work of Nowell and Nordin Ч to get to the bottom of things. And the law firm produced a report mildly critical of the DEF executives. Claiming the DEF is a private company, it has refused to make that report public. Odle, meanwhile, describes Maly as "a disgruntled former employee who has been unable to find a job for a year."

Odle suggested Maly needed to let go of his displeasure with the DEF and move on in life. "I actually feel kind of sorry for him. Rather than look at the future, which I wish he would do, he's in Moscow and hasn't had any work for a long time," Odle said.

As evidence of Maly's unreliability, Odle also read over the telephone an e-mail he said he had been forwarded: a thoroughly unfavorable description of Maly written by one of the DEF's six investment officers. That letter Ч apparently solicited by someone who had been considering hiring Maly Ч described Maly as destructive, arrogant, untrustworthy and dishonest. The letter's author recounts trying to have Maly fired from the DEF.

Maly, in turn, has described his own efforts to have that particular investment officer fired. The two seem to have shared a mutual contempt. Asked why, Maly launches into another theatrical performance.

"I don't know, I'm not a part of the drug culture," he begins, and then offers the following imitation of his nemesis the investment officer: Leaning across his kitchen table, he shouts, "AAAH! AAAH! AAAH!" and then runs out of the room Ч to the bathroom Ч then returns seconds later with a serene look on his face to make dreamy small talk.

"I am not gloating," Maly adds. "My point simply is that when an executive has serious psychological problems and/or is chemically dependent, this person should get help and medical advice, not run a venture capital fund and lose millions of dollars."

'Legitimate Е to Seek Redress'

Maly spent 2000 writing a second and more ambitious book, "How to Make Russia a Normal Country;" testifying to or hectoring various parties interested in the DEF; and job-hunting.

He says he has been rejected for more than 100 jobs within the foreign aid community, and suspects he has been "blacklisted." Pressed on that, he clarifies: He believes that the whistleblowing process he began now has a life of its own, and so his reputation will remain in limbo until there is some sort of public resolution to it.

Nordin has done his bit to help Maly's job hunt. He has kept up a courtly correspondence with his tormentor Ч tracking down insurance and severance pay questions for Maly, or updating him on the results of investigations Maly's crusade has spawned. Nordin even wrote a recommendation letter dated Jan. 21, 2000 Ч six months into the official investigations provoked by Maly's complaints Ч "to recommend Mr. Maly as an intelligent, dedicated, principled individual whom I would not hesitate to re-employ." (Today Nordin characterizes that letter as a kindness which, read carefully, says very little.)

Some of Maly's testimony shows a concern over whether the DEF treated him fairly by denying him salary reviews for a two-year period.

"On one hand, no financial or any gain for me personally can be realized as a consequence of my letter to [a State Department official, Ambassador William] Taylor," Maly wrote to a Weil, Gotshal & Manges lawyer investigating the DEF. "On the other hand ... it may indeed be determined that my rights have been violated and/or that I have been singled out in a negative way because of my August 1997 conversation with Mr. Nordin or my [July 1999] letter to the ambassador. Should this prove to be the case, it seems to me, it would be legitimate for me to ask for a redress after the investigation has been completed." Odie talks about his enterprise fund work.