As I see it so far, there are four key factors in the case of Michael Calvey that will determine his fate in the coming weeks or months. (Click HERE to see my initial overview of the case.)
Factor 1: Michael Calvey’s stake in First Collections Bureau
- Prosecutors claim that Michael Calvey is a co-owner of the company First Collections Bureau (PKB, Pervoe kollektorskoe byuro) and that he purposefully forced Vostochny Bank to accept shares in a third company from PKB in lieu of payment for a debt.
- Calvey’s private equity fund, Baring Vostok, has issued a statement saying that while the fund owns PKB, Calvey himself is not a co-owner and plays no direct role in its management.
- Baring Vostok also asserts that Michael Calvey has no personal stake in PKB.
Factor 2: The real value of the 59.9% share in the International Financial Technology Group (IFTG), which Vostochny Bank accepted from PKB in lieu of payment
- The initial valuation for the 59.9% share of IFTG presented to the board of Vostochny Bank was 3 billion rubles.
- Prosecutors claim that the true value of the shares was 600,000 rubles, i.e. five thousand times lower.
- Such an enormous discretion in price cannot possibly be an accident, and one of the valuations must therefore be the result of purposeful falsification.
Keeping that in mind, two questions arise:
1. Who evaluated the share price of IFTG and when?
2. What was the true value of the shares at the time they were appraised?
- The initial valuation of 3 billion rubles was made by KPMG, one of the Big Four global auditing companies. Calvey declares that, “You can easily work out the real value of the shares. They truly cost between two and three billion rubles. That was the conclusion of an independent appraiser.”
- The later valuation of 600,000 rubles was conducted by Finvision Holdings Limited, a Cyprus-based company which holds a 32.5% stake in Vostochny Bank. Finvision is in turn owned by Artyom Avetisyan, who is presently suing Michael Calvey in English arbitration court for control of Vostochny Bank.
Factor 3: Michael Calvey’s ability to influence the decision by Vostochny Bank to accept IFTG shares
- Prosecutors assert that Sherzod Yusupov, the member of Vostochny Bank who negotiated the deal with PKB, was misled by Calvey as to the true value of the IFTG shares.
- On this account, Calvey responded, “Yusupov had access to all documents relating to the deal, and he is himself a highly-qualified specialist. Therefore, it’s impossible for him to assert that he was misled.”
Factor 4 (the most important): The state of US-Russia relations
- This is not a financial or economic question, but a political one.
- The worse relations between the US and Russia get, the more likely Michael Calvey is to be found guilty on felony charges in Russian court. This holds true regardless of the facts of the case.
- The worse Russian-American relations are at any given moment, the worse it is for any American hostage the FSB chooses to take.