US businessman Michael Calvey and his fund Baring Vostok have reached a deal with former Russian partners in a corporate dispute over their joint investment Vostochny Bank.
“The shareholders of Vostochny Bank have settled their corporate dispute” and “signed an agreement to the benefit of the Bank, its clients, depositors and creditors,” the two sides said in a joint statement.
Under the terms of the settlement, all claims in Russian and foreign courts and all arbitrations will be withdrawn, and Baring Vostok will pay the amount of alleged damages — 2.54 billion rubles, or some $32 million — to the Russian partners. Talks between the two sides had begun on October 15, as reported by bne Intellinews.
Initially, a London arbitration court ruled against the Russian partners and threatened to have their assets frozen. Artem Avetisyan, one of these partners, brought counter actions in Russian regional courts, which ruled in his favor. Meanwhile, criminal charges for embezzlement were brought against Calvey and other Baring Vostok executives — who served as directors of Vostochny Bank — leading to their arrest in February 2019.
New hope for the detainees?
Formally, the settlement of the commercial dispute has no connection to the criminal case against the Baring Vostok executives, who are still charged with embezzlement. Almost immediately after the corporate settlement was announced, the prosecutor confirmed that the criminal case will proceed.
The Russian justice system is known for its next-to-zero rate of acquittals. Only 0.25% of all cases referred to court in 2018 ended with not-guilty verdicts.
Nevertheless — and even though the parties in the corporate dispute formally “denied and refuted any alleged connection” between the settlement and the criminal case — Calvey’s lawyer Timofey Gridnev expressed hopes the deal will prompt the authorities “to reconsider their attitude” and “terminate the criminal case.” The settlement showed corporate disputes “can be settled between parties through negotiations and not by arresting businessmen on farfetched criminal charges,” he said in an exchange with the RBC news site.
Controversial charges and inhumane treatment
One of the most established Russian private equity firms, Baring Vostok invested in some of Russia’s best tech companies. The arrest of the firm’s executives under controversial charges shocked the business community in Russia and beyond. Calvey and his colleagues have always maintained their innocence.
The involvement of Avetisyan in an array of government-related organizations, raised speculations about the level of knowledge and involvement of the Russian government and president in the case.
In June 2020, Calvey’s lawyers revealed he had a malignant tumor in his leg. While the court allowed him to seek treatment at a private hospital, his appeal for an early house arrest release was rejected. In September, Financial Times reported that investigators refused to allow Calvey to remove his electronic ankle bracelet in order to undergo an MRI scan required for cancer treatment.
In the absence of MRI results, doctors were forced to remove the tumor using an outdated method that required Calvey to undergo an additional round of radiation therapy, The Moscow Times noted.
