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Illustration: Lazaro Gamio/Axios
Russia's legal system made global headlines yesterday, after a Moscow court sentenced opposition leader Alexei Navalny to a multi-year prison term for parole violations.
In a different Moscow court this week, U.S.-born investor Mike Calvey began fighting for his own freedom against very long odds.
Backstory: Calvey in 1994 founded Baring Vostok Capital Partners, a Russia-based venture capital and private equity firm that's invested billions of dollars into local companies, including Yandex and Ozon.
- In early 2019, Calvey and several colleagues were arrested on criminal embezzlement charges, stemming from BCVP's 2010 acquisition of a troubled Russian consumer bank.
- The bank faltered and later merged with another struggling lender that was led by an investor with Russian government ties. Calvey accused the investor of asset-stripping, and the investor countered by accusing Calvey of artificially inflating his bank's value.
- That investor's accusation ultimately led to Calvey's arrest, even though it read like a commercial shareholder dispute — a civil matter rather than a criminal one.
Fast forward: Calvey and the other investor eventually settled their issues out of court, with Baring Vostok paying around $33 million but not admitting any guilt.
- That settlement did not solve Calvey's problem with Russian authorities.
What he's saying: Calvey, in his opening statement to the court, pleaded not guilty and argued that investigators intentionally ignored exculpatory evidence. He also called the charges both "unfair" and "illegal."
- But it's not clear that Calvey's words will matter, as Russian prosecutors have a longstanding conviction rate above 99%
- Some of Calvey's supporters argue that the civil settlement could make him the exception to the rule, but that may just be wishful thinking.
The bottom line: Calvey's fate may double as the fate of Western investment in Russia, particularly for deals that may require in-person diligence or negotiation. If he goes away, so does such activity.