Here's what we know so far about the criminal case against one of Russia's biggest foreign investors, U.S. citizen Michael Calvey

This week, police in Moscow detained Michael Calvey, the U.S. founder of the private equity group Baring Vostok. The other suspects in the case are Baring Vostok partners Vagan Abgaryan and French citizen Philippe Delpal, investment director Ivan Zyuzin, First Collection Bureau CEO Maxim Vladimirov, and Alexey Kordichev, an adviser to Norvik Banka’s board chairman.

Update (8:05 p.m. Moscow time, February 15): After a three-hour hearing on Friday, Judge Artur Karpov delayed a ruling on Calvey's detention until 1 p.m. local time on Saturday, February 16. The remaining suspects were formally placed under arrest.

Update (4:00 p.m., Moscow time, February 16): Moscow Basmanny District Court has formally arrested Michael Calvey, placing him in pretrial detention.

The six suspects are accused of fraud in connection with a dispute over Vostochny Bank (formerly “Vostochny Express”). According to charges filed with the Federal Security Service, Vostochny Bank board of directors member Sherzod Yusupov says he was deceived before the February 2017 purchase of stock in First Collection Bureau. Sources told Kommersant that prosecutors claim Calvey convinced other Vostochny Bank shareholders (Abgaryan, Delpal, Zyuzin, Vladimirov, and Kordichev) to settle the debt owed by First Collection Bureau. “The shareholders’ council was told that the value of this firm’s assets was 3 billion rubles [almost $45 million], but the FSB concluded that the assets’ maximum value didn’t exceed 600,000 rubles [$8,990],” the newspaper reported. Maxim Vladimirov’s attorney argued in court that “not all the shareholders” agreed to the compensation issued for the loan, which became the grounds for the criminal investigation.

Wait — what did Calvey allegedly do?

A fellow Vostochny Bank shareholder says Calvey sold his shares in a heavily indebted debt collection company to Vostochny Bank without fully disclosing the debt.

Investigators took only a few days to gather their evidence against Calvey and the other suspects. Sherzod Yusupov pressed charges on February 7, and initial evidence collection was completed within just five days. On February 13, officials opened a formal investigation. The detention of Calvey and the other suspects was only reported when they were brought to Moscow’s Basmanny District Court for an arrest ruling. On Friday, Kremlin spokesman Dmitry Peskov told journalists that President Putin hadn’t yet been informed about the case against executives of one of the largest investment firms in the country. The Federal Investigative Committee and Federal Security Service (which took part in the investigation) have yet to comment officially on the detentions. Baring Vostok acknowledged the investigation in a public statement, clarifying that the criminal case is unrelated to the company’s business activities.

Update: Maintaining his innocence, Calvey says the charges are retaliation for a lawsuit against Yusupov's business partner in the London Court of International Arbitration. When Vostochny Bank merged with Uniastrum Bank in 2017, the latter's owner, Artem Avestiyan, “withdrew considerable sums of money from the bank he controlled disguised as simulated transactions,” Calvey says. “They bought a mushroom farm, a cannery, and so on.” Calvey says he turned to arbitrators in London to dispute the deals reached by Avestiyan and Yusupov.

Two detained suspects say they are willing to cooperate with investigators. Alexey Kordichev, who previously worked as an adviser to Vostochny Bank’s chairman of the board, has already testified against the other suspects. Baring Vostok partner Philippe Delpal also says he is prepared to work with prosecutors, telling the Moscow district court on Friday that he wasn’t involved in the approval of the First Collection Bureau deal, and stating that his name only appears in the case materials as a staff member at Baring Vostok. Despite these overtures, prosecutors asked the judge to jail all six suspects until trial.

Venture capitalists say Calvey’s arrest is a disaster for foreign investment in Russia. Forbes spoke to six prominent Russian venture capitalists about the case against Michael Calvey. Every one of them says the investigation will hurt Russia’s already crippled market for foreign investment. Eduard Gurinovich, the founder of Carprice, says the arrest “puts an end to normal foreign investors in Russia.” Alexander Borodich, the founder of Universa.io, noted that the charges might not relate directly to Baring Vostok, but he warned that Calvey’s arrest will nevertheless reduce the country’s attractiveness to other foreign investors. Konstantin Sinyushin, the founder and CEO of Untitled Ventures, told Forbes that Calvey was the last “world class” investor to operate in Russia, predicting that Russian startups will increasingly emigrate. Kirill Belov, a managing partner at Impulse VC, says Calvey’s arrest will precipitate a “global investment climate deterioration,” particularly damaging early-phase investments. Alexander Galitsky, the creator of Almaz Capital, called the arrest a blow to one of the pillars of Russia’s high-tech investment. Anton Gopka, the creator of ATEM, says the arrest erases an “oasis of security” in Russia’s investment world.

Mikhail Zelensky

Translation by Kevin Rothrock