In its article, The Wall Street Journal attempted to reconstruct the events leading up to the arrest of Michael Calvey and his colleagues on charges of embezzlement of 2.5 billion rubles from Vostochny Bank. The publication calls the businessman the “Kremlin cheerleader” (for the investor’s reluctance to leave the Russian market after 2014 and the statements he made at the same time), and the case against him is an event that probably put an end to the remaining prospects for attracting Western investment in Russia. One of the newspaper’s interlocutors, investor Patricia Cloherty, speaks of Calvi as the “last hero” in the Russian market. Cloherty led Delta Private Equity, which managed the US-Russian investment fund TUSRIF, but withdrew business from Russia in 2013 due to increased “anti-Western rhetoric,” the newspaper writes.
The publication spoke with employees of Baring Vostok and with the minority shareholder of Vostochny Sherzod Yusupov, according to the statement of which the case was initiated. Another Vostochny shareholder mentioned in the article, Artem Avetisyan, refused to communicate with reporters. In WSJ's presentation of the Calvi case, in which he was detained, the following chain of events preceded:
Baring Vostok began looking for a partner in Vostochny in order to reduce risk: the fund became a minority shareholder of the bank in 2010 and over 5 years turned into a major shareholder with a 75% stake. It was a “dangerously big bet in his portfolio,” writes WSJ. One of the candidates turned out to be Artyom Avetisyan, a co-owner of Uniastrum Bank, a man who “had good connections and seemed to be one of those entrepreneurs who were successful in Russia,” the publication describes.
Uniastrum merged with Vostochny in early 2017. Kalvi and Avetisyan personally discussed the “final touches” of the deal at a dinner on the porch of the Madame Wong restaurant in central Moscow in August 2016, a source at Baring Vostok told WSJ. They agreed that after Uniastrum joins Vostochny, Avetisyan will receive 40% of the combined bank, and then an option to purchase another 10% of the shares, which will give him a controlling stake.
It was “extremely important” for Avetisyan to gain control in Vostochny, as he wanted to create a “superbank” for small and medium-sized Russian businesses, Yusupov told the newspaper.
A few months after the merger, Baring Vostok employees began to receive information that loans transferred to Vostochny from Avetisyan Bank were not paid on time, WSJ sources told the investment fund. Baring Investment Director Ivan Zyuzin studied the situation and found out that shortly before the merger, Uniastrum provided loans to companies owned by Avetisyan’s friends.
Yusupov claims that there was nothing wrong with this, and loans were issued to "very significant companies." He said that they delayed payments only because Vostochny employees did not manage their loan portfolios well enough. Baring Vostok denies his version.
As the volume of non-performing loans grows at Vostochny, the Central Bank began to worry, writes WSJ. In early 2018, the regulator “began to threaten to revoke the license from Vostochny if it did not increase its capital and strengthen its portfolio, and sent dozens of auditors to check all corporate loans issued by the bank - one after another,” a source told Baring Vostok.
An audit, the results of which were released later, confirmed the suspicions of Baring Vostok employees regarding the “scale of activity” of Uniastrum before the merger. “In the period from June to August 2016, the number of loans issued sharply increased, as a result of which 55% of Uniastrum's corporate loan portfolio, in fact, fell into the hands of two people,” writes WSJ. One of them was Vyacheslav Zykov, a longtime friend of Avetisyan, the newspaper writes. His companies involved in the production of juices, jams and mushroom cultivation accounted for 40% of the bank's corporate loans. Zykov did not answer WSJ questions.
Auditors also tracked several financial transactions for the purchase of shares. In 2016, within one day, funds from more than 10 different companies were transferred from Uniastrum Bank to an account with Deutsche Bank, owned by the company that Avetisyan later acquired, writes WSJ. According to a Baring Vostok employee who studied this operation, in the spring of 2016 Uniastrum paid Avetisyan to an offshore company $ 25 million for a company that had been bought a few weeks earlier for less than $ 100,000. This transaction, according to a WSJ interlocutor, was hidden from Baring Vostok during the preparation of the merger.
Auditors from the Central Bank concluded that these transactions “may indicate the withdrawal of assets from Uniastrum Bank, writes WSJ.
Yusupov said that in the "East" do not agree with this interpretation.
Calvi and his colleagues decided that it was necessary to annul the agreement on transferring a controlling stake in Vostochny to Avetisyan, said Baring Vostok partner Ekaterina Lukyanova. “After seeing how they manage their bank, Baring realized that he did not want to be a minority shareholder where they manage,” she said.
Yusupov, in turn, said that Calvi changed his mind about giving control in the bank when it began to become profitable. According to him, Calvi’s demands were “blackmail attempts” in order to get more financial concessions from Avetisyan. Baring Vostok denies this.
Avetisyan sent several messages to WhatsApp asking Kalvi to transfer him a controlling stake in Vostochny. Instead, Baring Vostok filed a lawsuit in a London court, demanding compensation for Uniastrum transactions completed prior to the merger. Avetisyan disputes the charges.
Avetisyan and Yusupov, in turn, accused Calvi of financial fraud. They referred to a deal completed in 2016, as a result of which Vostochny received 59.9% of the Luxembourg-based IFTG company as compensation for a debt of 2.5 billion rubles from the First Collection Bureau, invested by Baring Vostok. This transaction was the reason for the criminal case against Calvi and his colleagues: according to the investigation, this block of shares cost only 600,000 rubles. The case was opened at the request of Yusupov in the TFR and the FSB on February 13, 2019.
By that time, Kalvi and Avetisyan had not personally seen each other for several months. According to WSJ, citing a source in Baring Vostok, in February Avetisyan “signaled” that he wants to personally speak with the American. Lunch, which was also decided to call Yusupov, was scheduled for February 14 in Moscow. Calvi flew to Moscow to meet on February 11th. Two days later, he received a WhatsApp message from Yusupov asking him to confirm whether their plans were valid. The investor briefly confirmed that he had already arrived in Moscow and was going to be at the meeting. The next morning, according to WSJ, Calvi was detained by police in his apartment.