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Russian Business Rocked by Arrest of U.S. Investor

Baring Vostok founder Michael Calvey, his French partner, and four others held on embezzlement charges.

19 February 2019

Russian authorities are trying to mollify foreign investors amid shock over the arrest of successful U.S investor Michael Calvey (pictured).


The Kremlin knows Calvey as a “major investor … who always championed an idea of a high investment potential of the Russian market,” spokesman Dmitry Peskov said yesterday.


Peskov denied there was any political subtext to the case, which broke weeks after Russia arrested U.S. citizen Paul Whelan on spying charges. He said it was unrelated to the strained relations between Moscow and Washington, state-run broadcaster RT reports.


Calvey, long a Russian resident and founder of the Baring Vostok investment firm, and five others including Baring Vostok partner Philippe Delpal, a French national, were arrested last week on suspicion of defrauding a bank out of 2.5 billion rubles ($38 million), AFP reports.


Russian business leaders rushed to Calvey’s defense.


The CEO of the search engine Yandex, Arkady Volozh, said Calvey “has always been a standard for the market of decency and law-abidingness,” AFP reports.


Calvey’s firm Baring Vostok held a lucrative stake in Yandex. Its initial investment of $5.3 million in 2000 grew more than 500-fold to $2.9 billion when the company went public in 2011, Bloomberg columnist Leonid Bershidsky writes.


According to Reuters, former finance minister Alexei Kudrin, now head of the Russian Audit Chamber, said Calvey’s detention was “an emergency for the economy” and cast doubt on President Vladimir Putin’s order not to jail people accused of economic crimes.


Baring Vostok has been the most successful private equity firm in Moscow with almost $4 billion in capital, journalist Jason Corcoran says in an opinion for The Moscow Times.


The tactics used against Calvey look very similar to the case against U.S.-born investor Bill Browder who was accused of tax evasion after lawyer Sergei Magnitsky, investigation suspected fraud on Browder’s behalf, died in a Russian prison.


Both men attracted billions of dollars’ worth of foreign money into Russia, but while Browder invested in huge state companies like Gazprom, Calvey kept a lower profile.

“Calvey is very [well] respected within the industry,” said Julian Rimmer, a trader at the Investec firm who helped organize investor meetings for Baring Vostok in London, Bershidsky writes. “He’s been operating in Russia for a long time and is viewed as something of an insider, or at least someone of whom the regime clearly approves.”


  • The Russian business ombudsman reported that as of February 2018, more than 10,000 suspected white-collar criminals were in pre-trial detention or under house arrest, Bershidsky writes, adding, “It’s next to impossible to obtain bail when facing ‘economic’ charges; Calvey’s arrest is a case in point.”


  • “International firms aren’t equipped for Russia,” Calvey told The Washington Post in 2011, AFP writes. “And they usually have a low tolerance threshold for uncertainty and no sense of humor for Russian surprises.”
Compiled by Ky Krauthamer
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