Michael Calvi was one of the West’s biggest champions of investment in Russia – even after the security services threw him in a cell in the VIP wing of a notorious Moscow prison called “Kremlin Central”.
Now, the founder of private equity firm Baring Vostok is happy to be out.
The Oklahoman, 57, has emerged from a five-year ordeal after his company, which was Russia’s biggest Western investor, withdrew from the country in April and ended his probation on a 2021 suspended sentence for fraud. done
The surreal experience of being convicted forced Calvi to fight for his innocence while believing that the Kremlin had already decided the outcome. At his trial, state prosecutors argued that the documents Calvi’s team produced to demonstrate his innocence demonstrated how successfully he had covered up the alleged crime. “It was straight out of Kafka,” Calvi recalls.
He admits he thought his years of championing Russia would save him from the dark turn the country began to take under President Vladimir Putin — which would eventually lead to a full-scale invasion of Ukraine in 2022. caused
“I didn’t see the brutal face of Russia’s security services until I was arrested,” he tells the Financial Times in his London office in the first interview since his probation ended this summer. is “If there’s someone like me who has done a lot of good things for Russia . . . and convinced a lot of investors to put their faith in the country — if something like that could happen to me, it’s literally But it can happen to anyone.”
Baring Vostok is one of about 1,800 Western companies that have left Russia since the war began, selling their assets to local partners in April. Calvi says he wishes he could have denounced the war earlier, but fears the Kremlin could punish his investors and former Russian associates.
“I think I need to speak at some point,” Calvi says. “I don’t think I’ll be able to go back to Russia safely. . . And if you’re going to look forward to the war and its aftermath, it’s going to be impossible to do so without making some gentle statements about the war sooner or later. I wouldn’t be morally comfortable with that.”
Calvi started investing in Russia almost by accident. Growing up in Oklahoma, he originally intended to enter politics with ambitions of becoming governor of his home state. Instead, he spent a few years on Wall Street after university, working as an analyst at Salomon Brothers in the late 1980s – a period immortalized in Michael Lewis’s book. Liar’s Poker – Before taking a job at the European Bank for Reconstruction and Development financing energy projects in the Soviet Union. A week before starting, he left to climb the Matterhorn mountain in the Alps just as a group of hard-liners rebelled against Mikhail Gorbachev. When he disembarked three days later, he saw a photo of Boris Yeltsin, Russia’s first president, holding back conspirators from atop a tank.
This inauspicious moment marked the end of the USSR and the start of Calvi’s career. “It was fun and adventurous the way the Wild West probably was,” he recalls. He moved to Moscow in 1994 and founded Bering Vostok, which raised Western institutional funds and hired a local team to invest in Russian businesses.
It was not for the faint of heart. Successful investments attracted hostile attention from jealous oligarchs. Russia defaulted on its debt in 1998, forcing many Western investors to pull out. Calvi remembers a bank calling to check Bering Vostok that wanted to send funds into the country instead of withdrawing them. By this time, Kalvi had married a Russian woman and formed an inseparable team with his Russian partners. He discovered early-stage startups, such as search pioneer Yandex and online bank Tinkoff, that earned Baring Vostok huge profits when they went public.
As Putin consolidated his power and lashed out against the West, Calvi knew Russia had a dark side. The annexation of Crimea from Ukraine in 2014 made this clear. “You could see that there was this kind of fertile ground for nationalism, despair and anger. There was a very ugly face of Russia to look at up close. It was disturbing. I probably saw it as a fundamental threat. “Should have,” he says.
But Calvi thought Russia’s investment case was still very strong – and flew around the world to reassure his investors.
However, in the context of a full-scale attack, the two Russias began to converge. Baring-Vostok agreed to merge the bank with an up-and-coming businessman who secured Putin’s signature on the deal and was close to Andrei Belousov, who was appointed Russia’s defense minister this year. Shortly thereafter, Baring Vostok and the central bank discovered that Calvi’s new partners had rigged the deal after due diligence cut the deal, which quickly soured.
The dispute escalated. Calvi’s apartment mysteriously caught fire two hours before difficult negotiations over dinner with his business partners. Then, early one morning in February 2019, the security services arrested him on charges that, as Calvi later learned, Putin had personally supported.
Convinced of his innocence, Calvi was confident that the Kremlin would realize his mistake. “My arrest would cost Russia billions of dollars in lost investment. And I thought there were enough rational people at the highest levels of decision-making in Russia to figure that out quickly. Instead, he took it upon himself. found himself sharing a prison cell with a deputy culture minister, a Russian army general, a computer hacker, a drug dealer, and three construction magnates.
Calvi was among the first prominent Western executives to be arrested in Russia, making him a celebrity — as well as the target of abuse by guards. When he asked for a second mattress to help ease back pain from sleeping on a concrete slab, he says a warden replied: “Nobody gets a second mattress at Guantanamo Bay!”
Ultimately, as Calvi later learned, a series of influential Kremlin-linked figures lobbied Putin to withdraw the case, as did the US and French governments. But although Calvi and his co-defendants were released under house arrest, the security services refused to dismiss the charges.
“The system is like a car with six gears going forward and none going backward. Their basic organizational principle is never admitting a mistake,” he says. A Russian court gave them suspended sentences, prompting messages of condolence from their Western friends – and congratulations from Russians who knew that avoiding as much jail time as possible was the best thing to do.
Calvi left Russia for Switzerland, where his family lives, in January 2022 with every intention of returning. “I was very bitter about the people who controlled the system, [but] I still believed in the Russian people in particular. [those] who have really stuck their necks out to help me,” he says. His trial years were among the most profitable in Baring-Vostok’s history, although Calvi had grown increasingly pessimistic about the Russian investment case. He still had to appear for parole to protect his Russian colleagues. And despite tanks massing on the border with Ukraine, he didn’t think Putin would go through with the attack.
“I overestimated Putin’s rationality. I didn’t think he would make a decision that would be so devastating for Russia. Of course, this is the first and foremost tragedy for Ukraine, but it’s a tragedy for Russia. There is also strategic and human destruction,” he says.
Speaking again after the US election, Calvi acknowledged Trump’s victory as “hopefully a quick end to the war” but believed it was “a disaster for everyone, especially Ukraine”. “But I also hope that the Trump team’s goal is not just a cease-fire, but a larger agreement that will result in a permanent end to war between two independent nations. It will require complex negotiations and it will not be easy. Will be.
Calvi believes that Western sanctions have had unintended consequences. “If the goal was to impose costs, it has. But it has pushed some people who would prefer to live outside of Russia to go back there and put all their money in Russia because they have There is no place to go.
He thinks the West should have been quick to embrace people like the founders of two of Bering-Vostok’s most successful investments, Oleg Tinkov of Tinkov and Arkady Volos of Yandex. He left the country and spoke out against the war – but worked under sanctions for more than a year. “Used by the Russian government. [that] as a way to scare other people into doing the same thing,” says Calvi.
Calvi is now focusing on its main non-Russian asset, Kazakh fintech Caspi, as well as startups run by exiled Russians such as Plata, an online bank in Mexico founded by former Tinkov staff. He is open to potential investment in Ukraine if the fighting ends. But he believes Western countries should do more to encourage exiled Russian entrepreneurs. “Any sane country that understands modern economics would fall on its knees to recruit these invaluable people. And yet they get the cold shoulder instead. This is one of the West’s own major goals.
Baring Vostok’s exit from Russia cost its assets there billions of dollars. “In engagement, we should have stopped investing a decade ago,” Calvi admits. But he hopes the companies he helped build can help Russia improve.
“I’m still optimistic about the Russians – I’m very pessimistic about Russia itself,” he adds. “At some point in the future, there will be another opportunity to re-engage with Russia. It could be 10, 15, 20 years. . . . I feel like the work that we’ve done, you know, will make Russia a better place. Made it.”
