After Mike Calvey’s flawed trial, who will invest in Russia?


Russian opposition activist Alexei Navalny’s trial and conviction in February this year were closely watched and condemned by a range of international organizations. Good. But a similarly important Russian trial has also ended in a conviction, and the outside world would do well to pay similar attention to it. Mike Calvey, a US investor who has worked in Russia for nearly three decades, was convicted for embezzlement on highly spurious grounds. His fate signals that Russia isn’t safe even for those who, like Calvey, have proven themselves loyal to the country even as others denounced it.

“The judge today simply repeated word for word the prosecutor’s case. . . . There were literally hundreds of pieces of evidence that we submitted in court proving that my colleagues and I acted entirely legally and in the interests of Vostochny Bank. The absence of any crime was confirmed also by all of the witnesses who testified in court, including even the witnesses for the prosecution, as the prosecutor himself admitted,” Calvey said after being convicted of embezzlement in a business dispute involving Vostochny Bank.

Calvey, a US citizen who founded his investment firm Baring Vostok in Russia 27 years ago and has led it from Moscow ever since, received a suspended 5.5-year penal colony sentence, only marginally less than the six years the prosecutor had asked for. One French and five Russian colleagues of Calvey’s were given similar sentences.

The case involving Baring Vostok and Vostochny Bank is baffling. The prosecution alleged that Calvey and his colleagues had embezzled Vostochny Bank minority shareholders — Baring Vostok was the majority owner — over an investment deal by persuading them to accept a lower share price in an investment deal. Calvey and his co-defendants, though, said they’d been transparent about the details. The dispute had begun when Baring Vostok accused Vostochny minority shareholder Finvision’s top executive, Kremlin confidante Artem Avetisyan, of asset-stripping a bank before merging it with Finvision. Avetisyan seems to then have avenged the allegation by accusing Calvey and his colleagues of embezzlement.

Prosecutors acted on Avetisyan’s accusation. As it happens, he’s also Head of New Business Direction at the Kremlin-supported Agency for Strategic Initiatives (ASI), a body tasked with bringing businesses and executives to Russia. (Vladimir Putin is chairman of the ASI’s board.)

I know Calvey from London, where he was unsurprisingly a frequent visitor. Calvey could easily have moved Baring Vostok there, or to New York or Frankfurt. He always, however, returned to Russia, and his firm remained based there. Indeed, as the world has dramatically soured on the country in recent years, with scores of international executives leaving, Calvey has remained loyal to the country. “I convinced investors to share my trust in the future of Russia,” he said at this trial. “Even after 2014, when the geopolitical climate worsened and sanctions were imposed on Russia, I continued to defend the image of Russia as an attractive country for work and investment.” Calvey is that rare person today who takes a balanced view on Russia, engaging neither in Russophobia nor in knee-jerk defense of Putin’s misdeeds.

That makes it all the more puzzling that he would be singled out for criminal prosecution over a business dispute that may simply have been a misunderstanding and could at any rate have easily been resolved. It is, of course, also entirely possible that Avetisyan and his Finvision never felt misled over the Vostochny Bank deal and that the embezzlement allegation was simply a vendetta by him against Calvey and Baring Vostok.

Indeed, the message the Russian judiciary has sent with the conviction of Calvey and his French colleague Philippe Delpal is that not even Russia’s foremost allies among the expat community in Moscow and other cities are safe from spurious legal proceedings. Which Western executives in their right minds would — even if they can find a way of operating and making money in Russia while not violating Western sanctions — try to set themselves up there? Even though Avetisyan receives Russian taxpayer funding for his work at the ASI, his vendetta against Calvey will achieve the precise opposite of what the swank agency is set up to achieve. Avetisyan may be well-connected, but he’s doing his country no favors.

And Calvey? Unless his parole conditions change, he’ll have to remain in Russia for the next five and a half years. Every day of those years will be a reminder to other international business executives not to enter a market that holds so much potential for international businesses — but equally for ordinary Russians.

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