Emailed on February 22, 2019 in The Friday Forward

Mike Calvey was an American success story in Moscow. The U.S. citizen founded Baring Vostok Capital Partners in 1994, investing nearly $3 billion into local companies — including an early bet in Yandex at a valuation of just $15 million (current market cap on the Nasdaq is $10.3 billion).

Now Calvey is in a Russian jail, as are three of his BVCP partners, on fraud charges related to what Western eyes would view as a civil shareholder dispute. More specifically, Calvey is being quarantined in a solitary cell, reportedly without any money in his "jail account" to even buy basic toiletries.

In 2010 BVCP acquired a Russian consumer bank that soon fell on hard times, eventually merging with a fellow troubled lender led by a local investor known for his government ties.

Things soured quickly, with Calvey accusing the investor of asset-stripping his bank prior to the merger — including via a London legal action that's now in arbitration.

The Russian investor, via an associate, countered by arguing that BVCP artificially inflated the value of what it contributed to the merger; and it's that accusation that resulted in Calvey's criminal arrest.

Needless to say, foreign investors are now more skeptical than they already were when investing in Russia.