Charges against US fund manager Michael Calvey in Vostochniy case start to fall apart

Charges against US fund manager Michael Calvey in Vostochniy case start to fall apart
A Russian judge ruled that Barings share transfered as part of its debt payment obligations were worth several million dollars, not the $9600 the funds' former partners claimed. The case against US fund manager Michael Calvey seems to be falling apart
By EWDN in Moscow September 19, 2019

The charges against Baring Vostok executives could fall apart as investigators have re-appraised the value of shares of a bank, which was central to the case. These shares were handed over by Baring Vostok to Vostochniy Bank as part of a loan repayment; and their value was, in reality, many times higher than the amount alleged by the plaintiff in the case.

This important element was reported today by the TASS news agency as well as business dailies Kommersant and RBC from unnamed sources in the investigation.

In an exchange with TASS, Levan Dzhioev, the lawyer of Baring Vostok Capital Partners (BVCP) executive and French citizen Philippe Delpal, expressed “hope for a change for the best for Delpal and other defendants in this case.”

“The new valuation of the shares is several times higher than the old one on, which the prosecution was based. But certain questions still remain,” Dzhioev added, without specifying other details.

Political and international implications

US citizen Michael Calvey, as well as Delpal and Russian Baring Vostok executives, were arrested in February 2019. Their arrest and their placement in pre-trial detention based on controversial motives shocked the business community in Russia and beyond.

Calvey, then Delpal, were later moved from jail to house arrest.

The involvement of Artem Avetisyan, the plaintiff in the case, in an array of government-related organizations, raised speculations about the level of knowledge and involvement of the Russian authorities in the case.

President Vladimir Putin, who awarded Avetisyan the “Services to the Motherland” medal in 2015, was reported to have defended the decision to prosecute Calvey. The president might not have given approval in advance for the arrest, but said in closed-door comments, according to Bloomberg, that “pre-trial detention is sometimes justified in business cases,” especially when such cases are related to “risks to public safety and health.”

One of the most established Russian private equity firms, Baring Vostok invested in some of Russia’s best tech companies. The Calvey affair has been one of the heaviest blows to Russia’s perceived business image, following the Khodorkovsky case in the early 2000s, the Magnitsky case in the early 2010, and the exacerbation of international tensions after the events in Crimea in 2014.