Michael Calvey trial set to conclude as Russian court delivers verdict

Russia updates

A long-running embezzlement case against one of Russia’s most prominent foreign businessmen is set to conclude on Monday, capping a legal saga that soured investor sentiment and became emblematic of the country’s reputation as an often treacherous place to do business.

Michael Calvey, whose firm Baring Vostok is one of Russia’s largest investors, and six of his colleagues could face up to 10 years in prison on charges of defrauding a bank of Rbs2.5bn ($33m), in a case that his supporters say was brought without evidence by a politically connected rival over a business dispute.

Calvey’s arrest in 2019 shocked Russia’s business community and the few remaining foreign investors in the country still weathering western sanctions and an economic slump.

His pre-trial jailing and a trial that has been criticised by prominent Russian executives have prompted calls for an overhaul of the country’s judicial system, which is commonly abused in business disputes or used to press rivals into surrendering assets.

“We continue to believe the leaders of Baring Vostok did not commit a criminal offence,” Boris Titov, President Vladimir Putin’s commissioner for entrepreneurs’ rights, told the Financial Times. “The course of the trial, in our opinion, was replete with procedural defects.”

“The story with Baring Vostok did not add optimism and inspiration to [foreign investors],” he added. “However, it is not only foreigners who suffer from the flaws in the criminal prosecution system in Russia, and not the most. Domestic [investors] suffer much more.”

State prosecutors last month demanded that Calvey be found guilty and be handed a six-year suspended sentence, with similar punishments for his co-defendants.

Prosecutors argued in court that the reams of documents Calvey’s team produced indicating his innocence was proof of how successful he had been in covering up the supposed crime. “He showed all sorts of evidence and documents before he realised it wouldn’t work. That’s not what matters,” a person close to Calvey said.

Immediately after his shock arrest, Kremlin-connected figures including Kirill Dmitriev, head of the country’s sovereign wealth fund, worked behind the scenes to secure Calvey’s release, arguing that the image of keeping one of Russia’s few remaining major foreign investors in jail would be the death knell for Russia’s business climate.

Putin publicly backed the case, however, and made a show of support for Baring Vostok’s opponent in the bank dispute, Artem Avetisyan, a protégé of one of the Russian president’s top economic advisers.

Gradually, the pressure told as Calvey was released to house arrest in April 2019. Although the charges were downgraded, the prosecution continued regardless under pressure from law enforcement officials unwilling to admit that they had made a mistake, according to people close to the case.

Privately, people close to the US financier say he has expected to avoid jail time since late last year, when Baring Vostok settled the corporate dispute Calvey had said was at the root of the charges. During his breaks from the trial, Calvey has gone to work at Baring Vostok’s offices as normal and said he intended to remain in Russia after the trial.

In his final speech to the court, Calvey argued that an acquittal would “be a big positive signal proving that courts are independent and investors’ rights are protected [that could] attract billions of dollars in new investments to Russia and create thousands of new jobs”.

But Calvey was also resigned to his probable conviction — and the long-term headache for Baring Vostok’s business it would entail — to help the Russian justice system save face, the people said. “Better a horrible end than an endless horror,” one of them said.

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