COVID-19 and Trump’s indifference helped human rights abusers in 2020
Durov rejects Western funds’ offer to buy 5%-10% of Telegram with $30bn valuation
Belarusian government sees $2bn of withdrawals, issues $580mn worth of bonds in 2020
Lukashenko: I am no enemy of the people
One of Russia’s biggest wood product companies, Segezha could be Sistema’s next IPO
The volume of the Russian National Wealth Fund tops $183.93bn as gold overtakes dollar asset for first time
New Ukrainian VC firm QPDigital aims to invest up to $100 million in digital startups
EBRD investments reach record €11bn in pandemic-struck 2020
FPRI BMB Ukraine: Most Ukrainians are optimistic about 2021 – poll
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Estonian premier quits after Tallinn development scandal
Top Centre Party official suspected of corruption in Tallinn real estate scandal
Czech Pirates and Mayors approve final coalition agreement for 2021 elections
OUTLOOK 2021 Czechia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
Romanian tech entrepreneurs expand into banking sector
OUTLOOK 2021 Hungary
Hungarian government remains silent after Capitol riots
Storming parliaments: New Europe's greatest hits
World Bank expects modest recovery for Europe and Central Asia in 2021
FDI inflows to CEE down 58% in 1H20 but rebound expected
OUTLOOK 2021 Slovakia
Slovakia to invest €1.2bn in digitisation
BALKAN BLOG: The controversial recipe for building up Albania
Heavy flooding causes chaos in parts of Southeast Europe
Vodafone Albania plans €100mn infrastructure investments after AbCom merger
OUTLOOK 2021 Albania
Kyiv accuses Bosnian President Dodik of lying about icon gifted to Russian foreign minister
Bosnia’s real GDP contracts 6.3% y/y in 3Q20
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
ING THINK: Growth in the Balkans: from zero to hero again?
OUTLOOK 2020 Bulgaria
Labour demand down 28% y/y in Croatia in 2020
Zagreb Stock Exchange's Crobex10 index at highest level since March 5
OUTLOOK 2021 Kosovo
Arrera Automobili aims to launch Albania’s first supercar
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Moldova’s PM resigns to prepare the ground for early elections
Socialist lawmakers in Moldova scrap settlement on $1bn bank frauds
Montenegro’s new ruling coalition carves up top state jobs
OUTLOOK 2021 Montenegro
Vast tide of floating waste threatens Balkan hydropower plants
North Macedonia's manufacturing confidence indicator down by 8.5 pp y/y in December
OUTLOOK 2021 North Macedonia
Transparency International warns of high corruption risk in CEE defence sectors
Moldova fears flooding from Ukraine's planned Dniester hydropower plants
Romania’s industrial recovery paused in November
OUTLOOK 2021 Serbia
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
Slovenia’s dire COVID-19 situation in 4Q20 caused second economic dip
Slovenia’s Eligma completes €4mn funding round
Turkish opposition leader lawsuit demands one lira from Erdogan, police probe “bald” interior minister posts
Akbank takes over Istanbul's Palladium Atasehir shopping mall
Armenia’s PM cautions conflict with Azerbaijan “still not settled” after trilateral meeting with Putin
Armenia prepares to ban Turkish imports
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
Russia, Kazakhstan pushing for oil production increases on the back of coronavirus vaccine-fuelled oil price optimism
OUTLOOK 2021 Georgia
Georgia’s political kingpin Bidzina Ivanishvili quits politics
Modern-day “Robin Hood” inspires Georgians drowning in debt
Iran’s navy conducts missile drill while analyst argues Trump even capable of nuclear strike in final days
TEHRAN BLOG: Who’s more credible? Johnson backing Trump’s Nobel chances or Iran applauding arrest warrant for US president?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
OUTLOOK 2021 Kyrgyzstan
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
OUTLOOK 2021 Tajikistan
China business briefing: Not happy with Kyrgyzstan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
Turkmenistan: The dammed united
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
OUTLOOK 2021 Uzbekistan
Uzbekistan’s Makro positions itself for growth in a more competitive market
Download the pdf version
Letters to President Vladimir Putin and Russia’s powerful Federal Security Service (FSB) reveal how shareholders in Russian lender Vostochny Bank sought to smear US investor Michael Calvey and draw other senior figures from finance and the security services into their scandalous dispute, bne IntelliNews can reveal.
Calvey, Russia’s most successful private equity investor, was detained in February 2019 on suspicion of “fraud carried out by an organised group” that is punishable by up to 10 years in prison. The 52-year-old investor, who remains under house arrest and who has just been diagnosed with cancer, maintains his innocence, claiming that the probe into alleged embezzlement of RUB2.5bn ($40mn) from Vostochny Bank is the result of a shareholder dispute.
His arrest and the detention of six others, including three colleagues at Baring Vostok, sent shockwaves through Russian financial circles. The affair has been a major embarrassment for the Kremlin, as Calvey has attracted billions of dollars of investment to Russia and is one of the best-known investors in Moscow. Several senior Russian officials, such as presidential ombudsman for business Boris Titov and head of the Russian Fund for Direct Investment (RDIF) Kirill Dmitriev, have broken ranks to agitate for Calvey’s release, but to no avail.
Now bne IntelliNews has obtained correspondence sent by Artem Avetisyan, a fellow shareholder in Vostochny Bank, to President Putin and the FSB showing the extraordinary lengths that were used to try to frame Calvey and his colleagues and portray them in a negative light. It is widely believed that Avetisyan engineered the charges making use of his friendship with Andrei Belousov, Russia’s First Deputy Prime Minister and a key economic adviser to Putin.
Artem Avetisyan (right) is a well connected Russian business man, friends with First deputy Prime Minister and Putin's economic advisor Andrei Belousov and Russian Minister of Agriculture Dmitry Patrushev, who is also the son of the former head of the FSB
The correspondence claims Vadim Bakatin, a former adviser to Baring Vostok, who has not worked with the fund for 10 years, who was the former head of the KGB (the FSB’s predecessor), used his influence to help various probes into Baring Vostok go away over many years. The letters also drag Boris Jordan, the co-founder of the investment bank Renaissance Capital, into the scandal and claim his Sputnik Group tried to use nefarious methods with Baring to seize control of Vostochny Bank. The correspondence also includes claims made of an insurance scam involving Sputnik-controlled Renaissance Insurance and the bank.
The tranche of letters sent by Avetisyan to Putin, the FSB and the governor of Russia’s Central Bank (CBR) was described by one insider that spoke with bne IntelliNews as a “guide to reiderstvo” or “raiding”, a catch-all term that describes a variety of illicit tactics – including theft, bribery, forgery and physical intimidation – used by businessmen, tax officials, lawyers and financiers to seize another business.
It is claimed that Calvey has “close ties” to Bakatin, a Russian politician who served as the last chairman of the KGB before it was transformed into the FSB, and his son Dmitry Bakatin.
One letter says funds had been paid to the Bakatins to help “end any investigation in the Russian Federation against Baring Vostok.” Bakatin was on the Baring Vostok’s payroll as an adviser, although his exact duties are unknown. Before leaving the KGB, Bakatin was accused of treason after revealing to the US Ambassador at the time how his Embassy was to be bugged.
The correspondence levels accusations at Calvey for allowing Boris Jordan’s Sputnik Group “exclusive terms” to sell Sputnik’s Renaissance Insurance products in the bank’s branches at rates much higher than the market. Jordan and his Sputnik partners are furthermore alleged to have aided and abetted Calvey in trying to seize control of Bank Vostochny by providing “false testimony” in an Amur court case to replace the chairman of the board. Jordan didn’t reply to request for comment.
Calvey is also accused by Avetisyan in the letters of disrupting the sale of shares in Modulbank by “spreading false and defamatory information.” In 2019, Avetisyan sought to sell his stake in Modulbank so he could participate in the additional issue of Vostochny Bank shares.
The letters also grumble about Nabiullina and the “unfair treatment” of Vostochny Bank under Avetisyan and his partners compared to when the lender was controlled by Baring Vostok. The CBR inspected the bank and found it to be undercapitalised and ordered to shareholders to increase its capitalisation, which was the trigger for the conflict between the shareholders.
While none of these claims have actually formally been levelled against Michael Calvey and his colleagues, it looks more like a smear campaign that pushes all the right buttons with Kremlin and security services officials in order to lay the groundwork for the “raid” that came later.
Representatives for Baring Vostok declined to comment on the accusations laid out in the documents seen by bne IntelliNews, saying they could not comment on claims that had not been filed as part of the criminal case.
Avetisyan and Vostochny Bank did not reply to requests for comment. Avetisyan has previously refuted any involvement in the criminal proceedings and claims they are unrelated to the dispute over control of the bank.
Avetisyan, 43, is a director at the Kremlin-backed Agency for Strategic Initiatives, which is charged with improving Russia’s investment climate and chaired by President Vladimir Putin.
His beef with Calvey originates from a disastrous merger between Vostochny and his lender Uniastrum that bne IntelliNews profiled in 2009 during its heyday, which is the source of RUB17.5bn in claims by Baring Vostok for “fraud and questionable transactions” that Avetisyan and his junior partner Sherzod Yusupov committed after the pre-merger due diligence was over but before the legal documents were signed.
Since the 2014 devaluation of the ruble, Vostochny has been having serious problems and has been one of Baring's worst ever punts. It was once one of Russia’s leading consumer financing banks, which bne IntelliNews profiled in 2012, specialising in providing services in Russia’s regions, but the CBR ordered the owners to re-capitalise the bank once the holes in the Uniastrum balance sheet came to light. This prompted a fresh dispute between Calvey and Avetisyan about how much money they should put in and to what extent their stakes should be diluted.
Saying all other attempts to resolve the dispute had failed, Baring Vostok sued in the London International Arbitration Court to recover the RUB 17.5 billion they say Avetisyan and Yusupov took out of Uniastrum.
In the face of potentially crippling damaged from the LCIA, Avetisyan’s junior partner Sherzod Yusupov filed a criminal complaint against Calvey and his colleagues last year to the FSB, which led to arrests just eight days later. Avetisyan’s company Finvision took over the bank last summer after the Russian court ordered Baring Vostok to execute an option agreement for 10% of the shares in Vostochny, even though Baring Vostok claims the agreement is no longer valid in light of the numerous violations of other parts of the shareholder agreement.
House arrest under a new roof
Despite being very successful, Calvey built up a reputation of an honest investor and is well-liked in the business community. Calvey and his team made canny bets in early Russian internet projects and sat on the investments even after the first tech boom imploded in early 2000s. It paid off handsomely and Calvey once told this correspondent that they had made a staggering 500-fold return on their investment in the Russian tech giant Yandex.
A former exec at the EBRD and Salomon Brothers, Calvey had moved to London a few years ago for family reasons after more than two decades in Moscow. As a founder and senior partner, he still very much the lead dealmaker and frequently visited Russia. A thoughtful man who speaks fluent Russian, Calvey may have believed he was safe if he complied with all the written and unwritten rules but it’s now apparent that there are no longer any rules for doing business in Russia.
While the First General-Jurisdiction Appeal Court of Moscow was hearing the appeal on June 23 against the extension of Calvey's house arrest and the house arrest of other defendants, his lawyer asked the court to pay attention to the medical documents certifying Calvey has been diagnosed with cancer. As has been reported previously, Calvey had hip surgery in the spring.
"At the moment he is alright, fully in his faculties, and doctors have given a favourable prognosis," said his lawyer, Timofei Gridnev. “Michael feels about this ordeal the same as he feels about the process of proving his innocence: he has no doubt he will win.
But the Appeal Court didn’t listen to the entreaties at a hearing on June 22 and upheld as lawful the extension of the house arrest of Calvey and his colleagues until the middle of August.
If Calvey is eventually convicted, he faces up to 10 years in Russia's often violent penal colony system.
What remains to be seen is what is going to happen to Baring Vostok and its impressive array of asserts worth $3.7bn. It’s an awful time to sell given the global economic climate but the firm may have effectively secured itself a new krysha in the form of the Russian Direct Investment Fund, led by private equity veteran Kirill Dmitriev. The Kremlin-backed RDIF and Baring Vostok are now co-investing together, with their latest punt being in IT developer SKB Kontur.
On June 5, the RDIF also announced the creation of “a joint investment platform of up to $200mn” along with Baring Vostok and two other local private equity players, Elbrus Capital and RTP Global Dmitriev, a stalwart of the Russian buyout scene before being hired by the Kremlin, has been the most vocal advocate in official circles of Calvey’s innocence. The Ukrainian cut his teeth working as a manager at Delta Private Equity Partners, a US-government backed investment fund designed to promote capitalism by financing the growth of independent business in Russia.
An industry insider said RDIF gains from seeming to shield Baring Vostok: “They are seeing as having genuine and reputable partners in the market, while it’s no secret that Dmitriev has long been envious of Calvey’s reputation and track record since his days at Delta.”
Dmitriev set up the RDIF with the aim of it becoming a sovereign private equity fund but had to pivot to the public market as the shallow market in Russian buyouts was dominated by Baring Vostok and other non-state players. Plans to co-invest in Russia with global buyout players Blackstone and Goldman Sachs faded as the RDIF ended up having to do mostly politically motivated deals with sovereign funds in Saudi Arabia and Qatar.
In an interview with RBK newspaper on June 19, Dmitriev said Baring Vostok has “a high reputation” and he has given a personal guarantee for Calvey from day one. “We hope that in the near future the court, having understood all the circumstances of this case, will make a fair decision,” he said.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at email@example.com
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: