US Fund Manager Freed From House Arrest In Russia After Dispute With Kremlin-Friendly Investor Settled

Michael Calvey, a U.S. investor residing in Moscow, Russia, was freed from his house arrest on Nov. 12, Reuters has reported.

What Happened: The Supreme Court in Russia ended the Baring Vostok Calvey’s house arrest that lasted 19 months, following a corporate dispute over the major stake in the top 30 lender banks in Russia.

Though free from house arrest, Calvey, 53, still won’t be able to leave his home from 10 p.m. to 6 a.m., receive and send any correspondence, and communicate with others accused in the Baring Vostok case.

The case attracted international attention questioning the foreign investment climate in Russia after Calvey was arrested and charged with fraud in February 2019.

“The signal it sends to any foreign capital is horrid. It shows the country doesn’t want that kind of capital or doesn’t care,” a senior executive told the Financial Times at the time of the arrest.

The Dispute: The issue in question is the dispute between Baring Vostok, founded and managed by Calvey, and a local lender Vostochny Bank.

Baring Vostok has been accused of defrauding the Bank of $32 million (RUB 2.5 billion), FT reported at the time.

Calvey and three other employees involved in the case deny allegations and say that this is the result of a corporate dispute between him and Artem Avetisyan, who is said to have connections with the Kremlin and who also holds a minor stake in Vostochny Bank.

Even though Avetisyan denied having any connection to the arrest, he was the one who received the control of Vostochny Bank after Calvey was arrested.

The Settlement: On Oct. 28, Baring Vostok made an official statement with Avetisyan putting an end to the legal battle that was also taking place in courts in London, Cyprus, and Italy.

The Baring Vostok agreed to pay $32 million to Vostochny Bank for the alleged defrauding.

Cancer Under House Arrest: Calvey was diagnosed with liposarcoma after a year under house arrest. And even though he was allowed to undergo the treatment at a private clinic, he was not allowed to remove his electronic monitoring bracelet for an MRI scan.

Cawley had to have an extra round of radiation therapy, and the tumor had to be removed in a “more antiquated” manner because there was no MRI scan, according to FT sources.

Who Is Michael Calvey? Oklahoma-born, Calvey earned his master’s degree in Finance and Accounting from the London School of Economics. He worked as an oil and gas banker at Solomon Brother bank and the European Bank for Reconstruction and Development. 

What is Baring Vostok? Baring Vostok is one of Russia’s biggest foreign investment funds. It invested more than $2.8 billion in 80 local projects, according to the fund’s official site.

Calvey founded the company in 1994 when Russia was transitioning from the Soviet Union to what it thought at the time would be democracy and capitalism.

The fund has been focusing on the local market and has been investing in successful companies, such as Yandex NV YNDX, also known as "Russian Google," a company that is now valued at $21.78 billion.

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