Baring Vostok Capital Partners’ founder Michael Calvey and three employees have been detained in Russia in relation to an ongoing commercial dispute, according to a statement from the private equity firm, Russia’s oldest and largest.
The four members of the private equity firm were detained on Thursday due to a dispute pertaining to retail bank Orient Express, a Baring Vostok portfolio company, the firm said.
Calvey and the three partners are “suspected of embezzling 2.5 billion rubles” ($37.5 million; €33.3 million), Russian news agency Interfax said, citing an investigator at court. Baring Vostok’s financial industry partner Philippe Delpal is among those being detained, Interfax reported.
“Baring Vostok believes these charges are related solely to an ongoing commercial dispute related to Orient Express, a Baring Vostok Fund portfolio company, and they do not relate to Baring Vostok as a whole, or any other Baring Vostok Fund portfolio companies,” the Baring Vostok statement said.
According to Reuters, the dispute involves Calvey and other staff allegedly persuading shareholders in portfolio company Vostochny Bank to accept a stake in another firm at an inflated price in 2017.
Moscow-based Baring Vostok has raised $3.7 billion and deployed $2.8 billion in 80 companies across Russia since 1994, according to its website. The firm raised $1.27 billion for its latest flagship, the 2012-vintage Baring Vostok Private Equity Fund V, according to PEI data.
Baring Vostok’s most recent investment was a minority stake in Papa John’s Russia, Commonwealth of Independent States and Central European business in 2018.
The year before the firm had run a GP-led restructuring process on its 2000-vintage fund involving Russia’s leading e-commerce platform.
Neither Russian-focused funds or Russian-based raised any capital last year, according to PEI data. Russian-based funds raised $2 billion in 2017, while $160 million was raised to invest in the region that year.
Baring Vostok’s full statement:
Yesterday, four Baring Vostok employees, including Michael Calvey, were detained by authorities in Moscow. Baring Vostok believes these charges are related solely to an ongoing commercial dispute related to Orient Express, a Baring Vostok Fund portfolio company, and they do not relate to Baring Vostok as a whole, or any other Baring Vostok Fund portfolio companies. Baring Vostok and all the Funds’ portfolio companies, including Vostochny Express Bank, continue to operate business as usual. Baring Vostok plans to fulfil all its obligations to finance Vostochny Express Bank capital increase approved by the Central Bank.