‘Electric shock’: Russia’s arrest of prominent American investor Michael Calvey jolts business community
- US founder of one of Russia’s biggest private equity firms accused of fraud
- Detention shocked business community and threatened to derail efforts to attract capital from abroad
The arrest in Russia of prominent US and French investors on suspicion of fraud has sent shock waves through Western business circles and sparked fears of cutbacks in foreign investment sorely needed for economic growth.
The founder and employees of the Baring Vostok private equity firm were arrested on Friday in a case brought with the help of the FSB security service.
The arrest took place on the same day Russia hosted leading businesspeople in the Black Sea resort of Sochi for a major economic forum which trumpeted the country’s openness to investment.
Michael Calvey, a US citizen and the founder and director of Baring Vostok, has been placed in pretrial detention in a Moscow jail for the next two months for alleged fraud, along with five others – including Philippe Delpal, a French citizen.
They are accused of defrauding Vostochny Bank of at least 2.5 billion roubles (US$37.7 million). Such a crime is punishable by up to 10 years in prison, according to the Russian criminal code.
All of them deny any wrongdoing and blame the case on a shareholder dispute.
In an opinion piece on Monday in the Vedomosti business daily, Maxim Bouev – vice-rector of Moscow’s New Economic School – wrote the case proves what investors have long known: “If you want to invest in Russia, you have to accept your risk of eventually being arrested and finding yourself in the dock.”