Woman found for Michael Calvey’s Russian assets

Michael Calvey and Philippe Delpal did not come to the Moscow City Court on Friday to consider their appeal against their sentence. An informed source said that each of them is in their own country, and their arrival, according to lawyers, may be hampered by the difficulty in obtaining a visa. Meanwhile, in December 2022, the division of Baring Vostok’s business into Russian and international parts began. According to experts interviewed by Kompaniya, the fund’s assets, such as Yandex and Ozon, today require close attention and new approaches, because the old ones “do not work anymore.”

“Has the right to”

On Friday, March 24, Russian news agencies reported the departure of American businessman Michael Calvey from Russia. The fact that he left the country became known back in May 2022, but the topic resurfaced when Calvey did not appear at a court hearing in the Moscow City Court.

At the meeting, they planned to consider the appeals of the parties – Michael Calvey and the Frenchman Philippe Delpal – against the verdict passed by them in 2021. However, the process was postponed to April 21, giving the participants the opportunity to familiarize themselves with additional materials during this time, as well as resolve the issue of translating documents into French.

A RIA Novosti source noted that both Calvey and Delpal left the Russian Federation immediately after the preventive measure was lifted against them. Recall that the Court of Cassation in January 2022 lifted the ban on certain actions for the American, including the ban on leaving the house. According to the interlocutor of the agency, Calvey is now in the States, and Delpal is in France.

Calvey’s lawyer, Timofey Gridnev, noted that Calvey plans to return to the Russian Federation to consider the appeal. According to him, this will happen if the American investor can get a visa, and there are difficulties with this now. The same version was expressed by Delpal’s lawyer.

Gridnev added that he did not know where his client was, comparing the receipt of such information with interference in private life. At the same time, he stressed that the businessman has the right to free movement, and does not violate Russian law.

“Corporate Conflict”

The case against the founder of Baring Vostok was initiated after an application was submitted to the FSB by a member of the board of directors of the bank, Sherzod Yusupov. He reported the theft of 2.5 billion rubles in 2015 from Vostochny Bank, which was then under the control of the fund. The accusation was based on the fact that Calvey took a loan from the bank for the indicated amount, but gave it back not in money, but in shares of the Luxembourg company IFTG. The transferred share was valued at 3 billion rubles, but the plaintiffs considered it 5 times too high. Kompaniya magazine covered this process in detail.

Calvey pleaded not guilty. He called the criminal prosecution an attempt by the shareholders of Vostochny to resolve a corporate dispute. In the end, the parties agreed that the First Collection Bureau, which belonged to the investment fund, would pay the bank 2.5 billion, and that, in turn, would withdraw the claim. In the fall of 2020, Evison (a structure of the Baring Vostok fund. – Ed.) and Finvision by Artem Avetisyan signed a settlement agreement, and Vostochny Bank abandoned claims against Calvey and Evison. Already in November, Calvey was released from house arrest.

However, the reconciliation of the parties did not affect the course of the criminal case. In 2021, the investment banker was found guilty of embezzling 2.5 billion rubles from Vostochny Bank and sentenced to 5.5 years of probation. The court concluded that “the correction of the defendants is possible without isolation from society.” In January 2022, the court, as part of the cassation hearing, commuted the sentence, canceling the ban on part of the actions against Calvey.

Business division

Michael Calvey is the founder of the oldest investment fund in Russia, Baring Vostok. Even before the guilty verdict was passed, the company stated that they did not intend to curtail the Russian business. The exit of BV from the capital of the second largest Internet provider in the Russian Federation ER-Telecom and the sale of 2GIS shares were then characterized as routine events here. The representative of the company in a conversation with the “Company” noted that the fund has about 40 portfolio companies, and it performs such operations every year, and this is the essence of its activity.

The fact that the fund does not plan to curtail its activities in Russia was repeatedly told to journalists in court by Calvey himself. He noted that he stayed in the country, among other things, because of his belief in its potential to become “one of the world’s leading investment markets.” And even after the conviction, Calvey said that he would continue to invest in the Russian economy.

Speaking at the American Chamber of Commerce (AmCham) conference in Moscow in September 2021, the entrepreneur assured that he still looks at investments in the Russian economy with optimism. Then he recalled that the bulk of Baring Vostok’s investment portfolio is concentrated in Russia and Kazakhstan. These countries account for 95% of the portfolio, he said.

However, in December 2022, news appeared that Baring Vostok would divide business and assets between two new management companies – Baring Private Equity and Vostok Investments. As RBC found out, citing sources in investment circles, Elena Ivashentseva, who previously held the position of senior partner at BV, will become the chairman of the board of directors of Vostok Investments. Under the management of this holding will pass companies whose main business is concentrated in the Russian Federation. These are Ozon, Solopharm, Skyeng, VkusVill, Familia and others.

And the Baring Private Equity fund managed by Calvey will take over the management of such international companies as Kaspi.kz, BlaBlaCar, Kolesa.kz. The source of the publication noted that the deal is similar to the way it would be if the Russian team bought these assets. However, there is no money in this deal, this is an exchange, the source said. It was clarified that the deal has yet to be approved by the government commission for the control of foreign investment.

Kazakh companies are not represented in Russia, and the French BlaBlaCar in March 2022 announced the suspension of investments in the country. At the same time, it was noted that the company decided to continue working in the local market under the control of the Russian BlaBlaCar team.

“Calvey can give some advice and recommendations”

Baring Vostok did not respond to the Company’s request about how the separation of assets went, and whether Calvey continues to have an impact on Russian business. We asked experts to assess the prospects for his return to the country and influence on Russian companies.

Given Calvey’s controversial personal experience (a successful business on the one hand, and dubious investigations on the other), he is unlikely to return to Russia, economist Nikita Maslennikov believes.

“What is the point? All his professional activities are connected with the interaction of the Russian financial market and the market of unfriendly countries. And now Russia is actually isolated, there is no more interaction. Calvey in Russia has no subject of professional activity left, ”the expert notes.

The answer to the question of whether Calvey will return to Russia will depend on whether there will be changes in the economic regime, notes political scientist Pavel Salin. In the case of a positive answer, such a scenario is real, he believes. At the same time, the political scientist expressed doubt that the entrepreneur continues to influence investment processes in Russia. “This is what all Western companies leaving the Russian market are doing now. It is called “separation”, in fact it is “leaving”,” he said.

The head of the Center for Strategic Communications, Dmitry Abzalov, also expressed doubts about the return of the investment banker to the Russian Federation. According to him, the decision on the division of assets in Baring Vostok was made at the level of top management. “But it is clear that someone has an influence on this decision,” the expert added. He recalled that the scheme with the division of business into Russian and international was very popular last year, and did not rule out that if the geopolitical situation stabilizes, Calvey will restore ownership of Russian assets. “There are many examples when the owner of the company then returned to business,” he said, expressing confidence that the American investment banker somehow indirectly retains its influence on business in the Russian Federation.

The division of assets in Baring Vostok is a classic business breeding scheme, it is used by everyone who takes such a step, Maslennikov noted. He drew a parallel with Yandex, whose Russian assets are now planned to be developed separately, and international assets separately. “This is a general principle for all players who have significant interests in foreign financial markets,” the expert noted.

Calvey’s influence on Russian business declined significantly with the start of the investigation and his placement under house arrest. It is unlikely that he could show strength and influence financial markets, Maslennikov argues. According to him, the American can give some advice and recommendations to the team, which is now responsible for local business. But all this is within the framework of standard corporate management practices, because “soon this business will be completely independent, operating within the framework of Russian jurisdiction.” Under these conditions, the team will have a more detailed vision of what is happening in the country. They can consult with the founder of the fund, but according to the expert, there is no talk of a dominant influence.

“The question of how this process will affect Russian business (Ozon, Yandex, Tinkoff, VkusVill and others) should be better formulated as “How will the state of these assets affect the state of Baring Vostok’s local business?” This is more important, because all these assets are problematic, ”the economist noted.

In “Yandex”, he recalls, restructuring has not been completed for a long time, at Ozon “warehouses are on fire every now and then.” The block of shares of these companies is solid, moderately promising, but requires careful attention and hourly control, Maslennikov is sure. According to him, today this is a problem for any asset manager who needs to understand in detail what assets you manage, what happens to them. But this is already a different level of analytics, because the situation is changing and the old approaches no longer work, concludes the interlocutor of the “Company”.