Last week a commercial litigation court (1) in the Far Eastern city of Blagoveshchensk, about 8,000 kilometers east of Moscow, ordered Baring Vostok to sell a 10% stake in Vostochny Bank. This bank is at the center of the lawsuit which led the Baring Vostok executive team to jail this past February.
In a statement, the private equity firm expressed “disappointment,” judging the court’s ruling to be “unfounded,” and announced an appeal.
“Baring Vostok believes that this entire court process, including today’s ruling, has caused serious damage to the reputation of Russia’s system of justice. Despite the fact that the defendant submitted over 6,000 pages of documents that shed light on the violations of the shareholder agreement and the option agreement, the court did not conduct a proper review of this evidence,” reads the statement.
“It is clearly not possible to issue a legitimate and informed ruling regarding a series of complex transactions that are governed by foreign law,” Baring Vostok added.
The firm remains “confident,” however, that its arguments will be considered during the appeals process.
Top executives still in jail
While Baring Vostok’s CEO Michael Calvey has been moved from pre-trial detention to house arrest, other Baring Vostok executives Philippe Delpal, Ivan Zyuzin, Vagan Abgaryan and Maxim Vladimirov are still in jail.
While Baring Vostok’s CEO, the US citizen Michael Calvey, has been moved from pre-trial detention to house arrest, other Baring Vostok executives Ivan Zyuzin, Vagan Abgaryan and Maxim Vladimirov, as well as French citizen Philippe Delpal, are still in jail.
These detention are “illegal,” maintains the private equity firm, which condemns “trumped-up charges” against them and believes they should also be granted house arrest.
“Just like Michael, the remaining four are engaged in investment activities in Russia, are integrated into the local community and are raising young children. Several of them are also engaged in charitable activities and providing assistance to children,” the private equity firm stated, referring to the formal reasons why the Russian investigative committee suggested last month that Michael Calvey be spared pre-trial detention.
Baring Vostok will continue to appeal to higher courts to “establish our colleagues’ innocence.”
“This case is the result of a commercial conflict that should be resolved in arbitration, making the detention of Baring Vostok employees in detention centres or even under house arrest illegal,” the PE firm believes.
The Baring Vostok top managers were arrested in mid-February on charges of “large-scale fraud” in a commercial dispute. The lawsuit was initiated by Artem Avetisyan, who is a shareholder of Vostochny Bank, and enjoys tight relations with an array of government-related organizations, as reported by East-West Digital News.
(1) Translated literally but wrongly from Russian, this “regional arbitration court” is a state judicial organ, not an arbitration mechanism in the English sense of the term.
