The Real Russia. Today. Michael Calvey's detention, swole bunnies, and Tatarstan's porno priest is defrocked
Friday, February 15, 2019 (Meduza's newsletter will return on Tuesday, February 19. Happy President's Day, Americans!)
This day in history (six years ago): Look! Up in the sky! It's a bird! It's a plane! It's a superbolide meteor flying at thousands of miles per hour over Russia's southern Ural region. On this day in 2013, the “Chelyabinsk meteor” starred in some of the best dashcam footage ever recorded.
- Criminal charges against one of Russia's biggest foreign investors, U.S. citizen Michael Calvey
- Republic editorial says Calvey case shows Kremlin's indifference to investment attractiveness
- RFE/RL journalist Mike Eckel wins FOIA lawsuit in Lesin case
- Following anonymous allegations of pedophilia, police search the home of the chemist who says he helped develop ‘Novichok’
- Russian Twitter teams up the sign bunny with its swole cousin
- Moscow police reportedly testing facial recognition glasses
- Dozens of armed men start enormous fight in Moscow café
- Meduza's roundup of top news reported at The Bell, Mediazona, BBC Russian Service, Kommersant, and TJournal
This week, police in Moscow detained Michael Calvey, the U.S. founder of the private equity group Baring Vostok. The other suspects in the case are Baring Vostok partners Vagan Abgaryan and French citizen Philippe Delpal, investment director Ivan Zyuzin, First Collection Bureau CEO Maxim Vladimirov, and Alexey Kordichev, an adviser to Norvik Banka’s board chairman.
Baring Vostok is one of the biggest funds specializing in investments in Russia and the Commonwealth of Independent States. Over the past 25 years, Baring Vostok has poured more than $2.8 billion into 80 companies in Russia, Kazakhstan, and Ukraine. It was one of Yandex’s first investors, buying 35.7 percent of the company in 2000. Baring Vostok has also invested in 1C, Avito.ru, the television network STS, Ivi.ru, Profi.ru, Evroplan, First Collection Bureau, Vostochny Bank, Renaissance Insurance, Tinkoff Bank, and many other businesses.
After a three-hour hearing on Friday, Judge Artur Karpov delayed a ruling on Calvey's detention until 1 p.m. local time on Saturday, February 16. The remaining suspects were formally placed under arrest.
The six suspects are accused of fraud in connection with a dispute over Vostochny Bank (formerly “Vostochny Express”). According to charges filed with the Federal Security Service, Vostochny Bank board of directors member Sherzod Yusupov says he was deceived before the February 2017 purchase of stock in First Collection Bureau. Sources told Kommersant that prosecutors claim Calvey convinced other Vostochny Bank shareholders (Abgaryan, Delpal, Zyuzin, Vladimirov, and Kordichev) to settle the debt owed by First Collection Bureau. “The shareholders’ council was told that the value of this firm’s assets was 3 billion rubles [almost $45 million], but the FSB concluded that the assets’ maximum value didn’t exceed 600,000 rubles [$8,990],” the newspaper reported. Maxim Vladimirov’s attorney argued in court that “not all the shareholders” agreed to the compensation issued for the loan, which became the grounds for the criminal investigation.
Wait — what did Calvey allegedly do? A fellow Vostochny Bank shareholder says Calvey sold his shares in a heavily indebted debt collection company to Vostochny Bank without fully disclosing the debt.
Investigators took only a few days to gather their evidence against Calvey and the other suspects. Sherzod Yusupov pressed charges on February 7, and initial evidence collection was completed within just five days. On February 13, officials opened a formal investigation. The detention of Calvey and the other suspects was only reported when they were brought to Moscow’s Basmanny District Court for an arrest ruling. On Friday, Kremlin spokesman Dmitry Peskov told journalists that President Putin hadn’t yet been informed about the case against executives of one of the largest investment firms in the country. The Federal Investigative Committee and Federal Security Service (which took part in the investigation) have yet to comment officially on the detentions. Baring Vostok acknowledged the investigation in a public statement, clarifying that the criminal case is unrelated to the company’s business activities.
Maintaining his innocence, Calvey says the charges are retaliation for a lawsuit against Yusupov's business partner in the London Court of International Arbitration. When Vostochny Bank merged with Uniastrum Bank in 2017, the latter's owner, Artem Avestiyan, “withdrew considerable sums of money from the bank he controlled disguised as simulated transactions,” Calvey says. “They bought a mushroom farm, a cannery, and so on.” Calvey says he turned to arbitrators in London to dispute the deals reached by Avestiyan and Yusupov.
Two detained suspects say they are willing to cooperate with investigators. Alexey Kordichev, who previously worked as an adviser to Vostochny Bank’s chairman of the board, has already testified against the other suspects. Baring Vostok partner Philippe Delpal also says he is prepared to work with prosecutors, telling the Moscow district court on Friday that he wasn’t involved in the approval of the First Collection Bureau deal, and stating that his name only appears in the case materials as a staff member at Baring Vostok. Despite these overtures, prosecutors asked the judge to jail all six suspects until trial.
Venture capitalists say Calvey’s arrest is a disaster for foreign investment in Russia. Forbes spoke to six prominent Russian venture capitalists about the case against Michael Calvey. Every one of them says the investigation will hurt Russia’s already crippled market for foreign investment. Eduard Gurinovich, the founder of Carprice, says the arrest “puts an end to normal foreign investors in Russia.” Alexander Borodich, the founder of Universa.io, noted that the charges might not relate directly to Baring Vostok, but he warned that Calvey’s arrest will nevertheless reduce the country’s attractiveness to other foreign investors. Konstantin Sinyushin, the founder and CEO of Untitled Ventures, told Forbes that Calvey was the last “world class” investor to operate in Russia, predicting that Russian startups will increasingly emigrate. Kirill Belov, a managing partner at Impulse VC, says Calvey’s arrest will precipitate a “global investment climate deterioration,” particularly damaging early-phase investments. Alexander Galitsky, the creator of Almaz Capital, called the arrest a blow to one of the pillars of Russia’s high-tech investment. Anton Gopka, the creator of ATEM, says the arrest erases an “oasis of security” in Russia’s investment world.
In an editorial, Republic staff writers say ironically that Michael Calvey’s detention in Moscow is the “perfect accompaniment” to this year’s Russian Investment Forum, which wrapped up in Sochi today. Republic says the criminal case highlights two problematic practices in Russia: the incarceration of businesspeople for economic crimes and the recruitment of security agencies to resolve commercial disputes.
Republic says the former tradition was popularized with the Yukos case, establishing a trend whereby jailed businesspeople watch from jail as their assets evaporate. More recent examples of this practice include the prosecutions of billionaire Vladimir Yevtushenkov and former Economic Development Minister Alexey Ulyukaev in connection with the fight between Sistema and Rosneft for control of Bashneft. Republic says an ongoing conflict involving Center-Invest Bank is another example of siloviki entanglement in commercial disputes.
These two practices in Russian business, Republic says, reflect the Kremlin’s “complete rejection of any investment attractiveness.” In other words, the Putin administration is now fully committed to squeezing domestic businesses for the country’s investment needs, which displays an attitude that should frighten foreigners and unsettle Russian entrepreneurs.
“A Washington judge has ordered the city medical examiner to turn over dozens of autopsy records and other files in the investigation of Mikhail Lesin, the former Russian press minister who was found dead in a D.C. hotel room under suspicious circumstances more than three years ago.” This is the result of a Freedom of Information Act lawsuit brought by RFE/RL journalist Mike Eckel. Read his report here.
Vladimir Uglev, one of the chemists who says he helped develop the Soviet nerve agent “Novichok,” told the BBC’s Russian-language service that police in Anapa searched his home this week, after unknown persons started posting leaflets on his car and outside his home and office accusing him of pedophilia.
The leaflets show Uglev’s photograph, full name, address, and date of birth, alleging that he uses candy to befriend children near schools and then solicits nude photos over Vkontakte. Uglev says three officers searched his laptop and tablet for evidence of child pornography, and also photographed his home. On February 15, he was fingerprinted and questioned at the local police station.
- Uglev is one of three Russian scientists to confirm the existence of a top secret Soviet chemical weapons program following last year’s “Novichok” attack in Salisbury, England. In March 2018, Uglev told The Bell that he worked at the state chemical research institute “GosNIIOKhT” on a weapon meant to be the USSR’s response to VX. Uglev also told The Guardian that a Novichok nerve agent was used in a double homicide in 1995. In April 2018, Uglev was hit by a car and seriously injured, though he told reporters that the incident was just an accident.
An apparently original Russian meme has taken Twitter by storm in recent days. In the meme, the ASCII sign bunny that gained international popularity in 2014 before surging again last year is joined by another ASCII rabbit: the buff bunny, which also saw a brief resurgence in 2018.
English-language Internet users used the sign bunny almost exclusively to broadcast individual statements and the buff bunny to add a bit of humor to conventional masculinity. However, a July 2018 buff bunny meme introduced a small sign bunny hiding behind its muscular counterpart in reference to an entirely different meme, “Don’t ever talk to me or my son ever again.”
Read Meduza's report here: “Russian Twitter teams up the sign bunny with its swole cousin”
Moscow’s municipal Department of Information Technology is testing augmented reality glasses with embedded facial recognition capabilities, a source in the city government told RBC. The company Ntechlab, which is known for creating the unusually powerful facial recognition tool FindFace, is reportedly behind the project.
The pilot version of the new technology, which will be integrated with a database of individuals wanted by the police, will have access to footage from 1,500 surveillance cameras throughout the Russian capital. RBC’s sources said the first public presentation of the project is scheduled for the Interpolitech exhibition in October 2019.
Yashar Aliev, the owner of the Neolit café in southeast Moscow, said 40 – 50 Chechen men entered the restaurant on the evening of February 14 and began attacking the establishment. The men were reportedly wearing masks and carrying firearms.
Aliev was not present at the time of the attack, but employees told him there were only four or five people in the café, primarily couples having dinner. No serious injuries resulted from the attack and the conflict that followed. Aliev’s car, which was parked near the café, was found riddled with bullet holes. Moskovsky Komsomolets reported that one 49-year-old man, Arzu Makhmudov, sought medical help but declined to be hospitalized.
Moscow police confirmed that a conflict had taken place in Neolit but said rumors of “a fight supposedly involving 100 people that injured 10 citizens do not correspond to the facts of the matter.” The Moscow division of Russia’s Ministry of Internal Affairs reported that only 20 people were involved in the incident. A police officer had to fire into the air to bring a stop to the fight. 18 people were arrested and charged with collective hooliganism.
Top stories from Russia’s news media
- 🏦 More details about the fraud case against investment manager Michael Calvey: After a three-hour hearing on Friday, Judge Artur Karpov (who recently extended the arrest of Alexander Shestun, the former head of the Moscow region's Serpukhovsky district) adjourned until Saturday, leaving Calvey behind bars for another night at least. Prosecutors want him jailed, while Calvey has expressed confidence in the court’s “objectivity” and his hope that he’ll be placed under house arrest. Calvey says the real reason Sherzod Yusupov claims to have been misled about Vostochny Bank’s February 2017 acquisition of First Collection Bureau (and the company’s 2.5-billion-ruble debt) is that Yusupov is partners with Vostochny Bank’s other co-owner, Artem Avetisyan, whom Baring Vostok is suing in the London Court of International Arbitration in connection with roughly a dozen deals that show signs of fraud. Calvey says Yusupov’s allegations in Moscow are intended (1) to force him to drop Baring Vostok’s lawsuit in London, and (2) to prevent the dilution of Avetisyan’s Vostochny Bank shares in a follow-on offering planned this April (to boost the bank’s capital reserves, in accordance with demands from Russia’s Central Bank).
- 👩⚖️ Defense attorney Dmitry Dzhulai says he has audio proof that a lawyer supposedly associated with a municipal court judge outside Moscow hinted to him that favorable rulings could be obtained through bribery. Dzhulai says the suggestion came from a public defender who represented his client at the investigation stage. This same woman is reportedly the sister of one of the assistants to the city court’s chairman. Dzhulai submitted a recording of this conversation to the judge in the trial, trying to get the judge removed, but she never even opened the sealed envelope. Unsurprisingly, there’s a whole mess of other procedural irregularities in the trial, as well. Dzhulai’s client is charged with large-scale fraud.
BBC Russian Service
- 🧳 Pobeda Airlines is at the center of a publicity scandal for offering unlimited free flights for the rest of the year to elderly Russian-Soviet actor Vasily Lanovoy, who was reportedly forbidden from boarding a plane in Moscow on February 14 because his carry-on baggage was too big. On social media, some are calling the incident a PR stunt, while others welcomed or criticized the special treatment. The story got additional attention thanks to the Federal Investigative Committee’s intervention and threat of a procedural judgement against the airline. (The agency's director, Alexander Bastrykin, is a devout Lanovoy fan.)
- 🤝 Communist Party leader Gennady Zyuganov is sticking up for KPRF’s candidate in Russia’s 2018 presidential election, Pavel Grudinin, who was recently removed from his post as City Hall speaker in Vidnoye, outside Moscow. Grudinin’s replacement is a United Russia member. He lost the position because of reported offshore assets and the resumption of a lawsuit against him for an allegedly illegal real estate sale. Colleagues also expressed disappointment in his stewardship and alleged concealment of his income during an anti-corruption inquiry. In a statement published on the party’s website on Friday, Zyuganov called for the “political persecution” of Grudinin to stop, promising to raise the issue in April when government cabinet representatives visit the State Duma.
- ☦️ A Russian Orthodox cleric in Tatarstan perhaps best known for encouraging women to watch pornography has been stripped of his priesthood by a diocesan court. Archpriest Vladimir Golovin and his son, Archpriest Anastasios Golovin, were booted from the clergy for creating a community contrary to the church’s values, confusing their congregation, and demonstrating persistent “disobedience and defamation.” Vladimir Golovin was suspended from service for three months last September for “anti-church activities.” When he refused to confess to the charges, he was stripped of several clergy privileges.