An American Helped Build Russia's Economy. He Was Jailed on Bogus Charges.

New York Times

23-03-2025

A foul cell in a Moscow detention center was about the last place an American businessman named Michael Calvey expected to find himself after spending 25 years building a flourishing venture capital firm in Russia that transformed some tech startups into global brands.
First, beefy agents from the F.S.B., the federal security service, ransacked his apartment before dawn. Hours later he was confined to a holding cell with two other inmates and a filthy hole in the floor for a toilet.
'The cell is stuffy and hot, an oppressive stench hanging in the air as if from accumulated decades of human sweat mixed with the indescribable horrors emanating from the toilet hole area,' Mr. Calvey wrote in a new book out this week called 'Odyssey Moscow.' It details his extended ordeal through the Russian court system in a fabricated fraud case initiated in 2019: 'In the course of a few surreal, terrifying hours I have morphed from one of the most successful Western businessmen in Russia into a prisoner of the state.'
With President Trump lauding the possibility of 'major economic development transactions' between the United States and Russia as he seeks improved relations with Moscow, Mr. Calvey's fate stands as a cautionary tale about the significant personal and professional risks involved in doing business in Russia, particularly given the arbitrary nature of its courts.
Perhaps no Western businessman promoted foreign investment in Russia more than Mr. Calvey, 57, who helped to forge internet titans from tech startups like Yandex — a version of Google, Amazon and Uber rolled into one — or Tinkoff Credit Systems, one of the world's biggest digital banks. The firm he founded, Baring Vostok Capital Partners, earned colossal returns.
Then Baring Vostok got mired in a nasty commercial dispute with two dubious Russian partners who were stripping assets out of a bank in a troubled merger. Once, Mr. Calvey's empty Moscow apartment mysteriously caught fire hours before a dinner involving tense negotiations.
After his firm filed a case with a London arbitration court, the partners convinced Department K of the F.S.B., responsible for internal financial crimes, that the American and several partners had perpetuated a massive fraud as part of a dastardly foreign plot to undermine Russia's financial sector.
The agents pounced in February 2019, and although no evidence of wrongdoing ever emerged in court, Mr. Calvey and several partners spent years in jail or under house arrest.
'Once the F.S.B. gets involved in a case, they're like a car with six gears going forward and none in reverse,' Mr. Calvey said in an interview in Switzerland, his home since finally being allowed to leave Russia in 2022. Lanky and trim, he retains a boyish air despite his gray hair. 'They will never back up or lose face.'
His arrest stunned Western investors. 'Everyone I knew was incredulous, angry and shocked,' said Bernie Sucher, an American banker with extended experience in Russia. 'It was viewed as a direct assault on the very idea of long-term investment in the Russian economy.'
Unusually, dozens of influential Russians defended Mr. Calvey. They included Kirill Dmitriev, the head of Russia's sovereign wealth fund and now a key negotiator for ending the Ukraine war; German Gref, the chief executive of Russia's largest bank; and Alexei Kudrin, a previous finance minister. The U.S. Embassy in Moscow also objected strenuously to his arrest.
Mr. Calvey thought such interventions, combined with the blow to investor confidence, would get the case dropped. But nothing outweighed the F.S.B.
President Vladimir V. Putin did summon top Kremlin officials, ordering them to get the American businessman out of prison, but also to find something illegal that Mr. Calvey had done, he said he later learned. At a tense time in U.S.-Russia relations, the Kremlin could not admit to arresting a prominent American businessman on false pretenses, he said.
Released from prison after two months, Mr. Calvey was confined to his apartment with an electronic monitoring device strapped around his ankle for two years, and spent a third under court-ordered supervision with an 8 p.m. curfew. When he developed a cancerous tumor in one leg, the court refused to allow him to remove the device, so doctors operated without benefit of an M.R.I.
The Russian Foreign Ministry and the Russian Embassy in Washington did not respond to requests for comment about Mr. Calvey's account. At the time of his conviction, Dmitry Peskov, the presidential spokesman, quoted Mr. Putin as saying that the government could not interfere in the courts.
When first arrested, Mr. Calvey was jailed in Matrosskaya Tishina prison, near downtown Moscow. It is sometimes called 'Kremlin Central' because so many inmates face charges in high-profile corruption cases pushed by the Kremlin. There were no violent criminals, but nobody is ever acquitted, either, Mr. Calvey wrote
His cellmates greeted him with a nonalcoholic toast: 'Novoselye,' or welcome. One was a former deputy minister of culture. Another was an army general. A younger one was a computer hacker, and three were construction moguls. Trust nobody, one of them confided.
Their cell, 13 feet by 16 feet, was tidy and somewhat comfortable, with a television and a separate toilet. The men shared everything equally from cleaning chores to food supplies from outside. He dedicated his book to the men of Cell 604, and tears up when he talks about them. The book will be released Thursday in Britain and in early April in the United States.
Throughout his detention, Mr. Calvey endeavored to avoid his jailers seeing him disturbed. His reading list included Kafka as an apt reflection of his fate.
When one prosecutor summarized the case, for example, she admitted that not a single witness testified to a crime being committed, then added, 'That just proves what a well-organized criminal group we are dealing with.' The entire courtroom laughed aloud, Mr. Calvey said.
The trial underscored F.S.B. control over the courts, with the closing statements repeating the opening accusations almost exactly, Mr. Calvey said. All the witness testimony might never have happened. 'Russian people are of course the main victims of its courts,' he wrote.
In August 2021, Mr. Calvey was convicted of the misappropriation of funds and given a five-year suspended sentence. The conviction on false charges grated, he said, a stain on all his work for Russia.
His Russia saga started in 1991, when just two years out of the University of Oklahoma, Mr. Calvey went to work for his former Wall Street boss at the European Bank for Reconstruction and Development. It was established to help the former Soviet bloc transition to a market economy.
He worked on financing energy sector projects. Considered young for the magnitude of the deals, he tried to camouflage his age by adopting a serious demeanor at work, said Charlie Ryan, his first Moscow roommate.
'Life for an expat in 1990s Moscow was equal parts bizarre and marvelous,' Mr. Calvey wrote. Pizza Hut was considered a high-end restaurant to impress a date. Kilos of inexpensive caviar proved a substitute for breakfast cereal.
Mr. Calvey established Baring Vostok to build businesses catering to the new middle class. He married a Russian woman named Julia, with whom he had two sons and a daughter, now all young adults.
He existed within an elite business bubble, surrounded by people eager to integrate Russia into the global economy. At the time of his trial, Baring Vostok said that overall, it had invested more than $2.8 billion in 80 companies across the region, making it the biggest such Western player.
He learned Russian through countless hours he spent with young, ambitious entrepreneurs. 'It was hard to spend time with them and not feel like Russia was a much, much better place than at the time of their grandparent's generation,' he said.
When prominent businessmen got arrested, Mr. Calvey attributed it to their meddling in politics. He considered his Russian associates overly gloomy about the direction of their country.
He ignored repeated red flags that Mr. Putin, a former K.G.B. agent, had handed control over every major institution to the siloviki, a Russian term incorporating all security agencies. Not even the illegal annexation of Crimea in 2014 deterred Mr. Calvey.
'What I didn't really appreciate, and only realized with my arrest, was the depth of the control and influence of the ruling caste of Russia, which is F.S.B. and the other siloviki,' he said.
Mr. Calvey's businesses thrived even while he was imprisoned, and he pulled the plug only after Russia invaded Ukraine in 2022. The hasty disinvestment cost his company billions of dollars, he said.
He is done with Russia. Although under Russian law his conviction was nullified after his five-year probation period ended a year ago, last week a Moscow court changed the probationary sentence given to a French defendant in the case to a prison term in absentia.
Mr. Calvey expects some American businesses to return, although he considers Russia too risky for long-term investments. A peace deal might prompt him to invest in Ukraine, however. He is fostering internet startups elsewhere, employing young tech talent that fled Russia.
The simmering geopolitical differences between Moscow and Washington mean that any businessman can become a chessboard pawn, he said, adding: 'You may hope that you're not going to get stepped on the head, but ultimately it could happen at any time.'