Michael Calvey sentenced to 5 and a half years for embezzlement in Russia

MOSCOW — A Russian court sentenced US private equity investor Michael Calvey to a 5.5-year suspended sentence for embezzlement, a day after a judge found him guilty in a case that galvanized the international business community for more than two years.

Six of Mr. Calvey’s associates, who were also found guilty, received various less severe sentences.

Upon reading the sentence, Judge Anna Sokova told the Meshchansky District Court in Moscow on Friday that the court found the testimony of Mr. Calvey and his co-defendants “exaggerated and true only to the extent that they do not contradict other evidence examined ”.

The 5.5-year suspended sentence includes five years of probation, which means that if Mr Calvey does not break the law for the next five years, his sentence will be considered served, the court said.

Russian prosecutors had requested a six-year suspended sentence for Mr Calvey, founder and senior partner of Baring Vostok Capital Partners and a prominent advocate for Western investments in Russia, who was arrested in February 2019 with his associates for defrauding the lender Vostochny. Bank of 2.5 billion rubles, the equivalent of about 32 million dollars at the time.

“It is just outrageous to be convicted of a crime that never happened,” Calvey told reporters outside the courthouse after his conviction. “And the specific conviction on the embezzlement charge is obviously deeply offensive to me as an investment industry professional with an honest reputation built over 25 years. I therefore consider the verdict to be unfortunate and deeply unfair. “

Mr Calvey said he and his co-defendants had always been realistic about the history and statistical results surrounding convictions in Russia. He said that “compared to most cases, getting a conditional sentence is almost a victory already”.

The conviction of the American businessman began Thursday and resumed on Friday, as the judge took two days to read the details that led to the verdict, including a lengthy summary of the evidence, which included testimony from witnesses and d ‘accused during the hearings in the case.

“The court, unfortunately, did not or could not understand the merits of the case, with no victim, no damage and no beneficiary,” Calvey said. “The judge simply repeated today, word for word, the text of the prosecutor’s file of October 2020, which itself repeated word for word the text of the preliminary accusation of the investigator of December 2019”, he declared.

He added that there were “literally hundreds of pieces of evidence that we submitted to the court proving that my colleagues and I acted legally and in the best interests of the Vostochny Bank.” He said that “the absence of any crime has been confirmed by all witnesses who testified in court, including even prosecution witnesses, as the prosecutors themselves admitted.”

The guilty verdict and subsequent sentence could tarnish Mr Calvey’s reputation and dash hopes of restoring the confidence of foreign investors that has collapsed since his arrest, some financial observers say. Foreign direct investment in Russia slowed to less than $ 9 billion last year, from $ 32 billion the year before, according to data from the Central Bank of Russia.

Former Russian Finance Minister Alexei Kudrin, who has advised President Vladimir Putin since before he took office, called Calvey’s arrest at the time a “shock to the economy” and told an international trade forum that the incident had caused an increase in the flight of capital from the country.

“The suspended sentence of Calvey and his colleagues is an attempt by law enforcement to save face,” Boris Titov, Russia’s affairs ombudsperson, said in emailed comments. “Dropping the charge altogether would indicate that for several years in a row the legal system failed to do what it should have done. “

Mr Calvey’s arrest sparked a months-long effort by members of the West-oriented Russian business community to help free him. The investor spent most of his detention under house arrest until the Supreme Court of Russia released him with some remaining restrictions last November. In his final court statement in July, he reiterated his innocence and said his acquittal “could lead to billions of dollars in new investment in Russia.”

Some government officials have played down the potential impact of Mr Calvey’s case on the investment climate in Russia.

Dmitry Peskov, spokesman for Mr. Putin, could not be reached immediately to comment on the conviction of Mr. Calvey on Friday. In July, Peskov told reporters that the Kremlin was aware that the foreign community was monitoring the case, but officials did not believe the episode would have a global impact on the investment climate in Russia.

“The main thing is the systemic measures that are taken to increase the attractiveness of the country’s investments and ensure that the investments are attractive,” Peskov said. “It’s a much bigger process.”

Sergey Aleksashenko, a Russian economist and former deputy finance minister, told independent broadcaster TV Rain on Monday that the verdict is unlikely to affect investment in the country.

“We all understand that this is neither the first nor the last case involving a businessman and the FSB,” Aleksashenko said, referring to Russia’s Federal Security Service. He added: “This is a fleeting episode.”

Mr Calvey was jailed while clashing with Russian businessman Artyom Avetisyan over their joint investment in Vostochny Bank. The American said in a previous hearing that the case against him was fabricated in part to help Mr. Avetisyan take control of the bank, which he did in the months following the arrest. by M. Calvey.

In October 2020, Vostochny Bank shareholders reached a multi-million dollar settlement to resolve a corporate dispute at the heart of the criminal case against Mr Calvey.

On Thursday, Kirill Dmitriev, director of the Russian Direct Investment Fund, said he believed Baring Vostok was “a very reputable company” and would continue to co-invest with it despite the guilty verdict.

Mr Calvey said on Friday he planned to meet with his lawyer, carefully read the full text of the decision and decide on next steps over the next week.

Baring Vostok said the cabinet “will continue to support our colleagues, whatever defense strategy they choose to pursue.”

Write to Ann M. Simmons at [email protected]

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