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Trade Groups Claim, American’s Detention Is A Potential Moment For Russia

For U.S. citizen Alexis O. Rodzianko, president of the American Chamber of Commerce in Russia and a longtime Moscow resident, the initial shock of Calvey’s detention might, however ironically, reveal a longer-term opportunity to recalibrate Russia’s ties with foreign investors.

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Founder of the Baring Vostok private equity group Michael Calvey, who was detained on suspicion of fraud, sits inside a defendants' cage as he attends a court hearing in Moscow, Feb. 15, 2019. VOA

Last week’s shocking detention of one of Russia’s most renowned and publicly visible American entrepreneurs not only caught fellow foreign investors off guard, it may have prompted a moment of national reckoning about how Moscow handles investor relations, say both Kremlin-aligned and international trade groups.

Baring Vostok founder Michael Calvey’s arrest Feb. 15 on charges of fraud stemming from a lengthy legal dispute with Russia’s Orient Express Bank sparked widespread speculation about whether the days of unbridled “reiderstvo” — aggressive Kremlin-backed asset raids and corporate takeovers synonymous with Yukos, Russneft, Bashneft, Stolichnaya Vodka and VKontakte — were a thing of the past, or whether, perhaps, Calvey had actually committed a crime.

A recent Moscow court decision to extend Calvey’s detention without trial for a minimum of two months on the grounds that his release poses a flight risk, along with indications that he’s been denied consular access in violation of the 1966 Vienna Convention, doesn’t bode well for professionals such as Aleksander Khurudzhi, who has been tasked by the state with rehabilitating Russia’s image as a secure place to invest.

‘This is a shock’

“From my point of view, what happened is in complete contradiction with statements of a Russian president who, from all rostrums, has expressed the same unchanging viewpoint: that Russia is open for investments and that Russia will do its best to attract and safeguard both Russian and foreign investments,” Khurudzhi, deputy ombudsman for the Kremlin office of business ethics, told VOA.

“This is a shock,” he added. “It undermines all the work being conducted by the Agency for Strategic Initiatives. All the work that has been done for the last seven to eight years aimed at improving the investment climate. It undermines trust in the system as such … (and our entire) team isn’t sleeping at night. Without any exaggeration, the work is being carried out for 24 hours. This is a challenge for all of us, for our whole team.”

Russian President Vladimir Putin addresses the Federal Assembly, including the State Duma parliamentarians, members of the Federation Council, regional governors and other high-ranking officials, in Moscow, Feb. 20, 2019.
Russian President Vladimir Putin addresses the Federal Assembly, including the State Duma parliamentarians, members of the Federation Council, regional governors and other high-ranking officials, in Moscow, Feb. 20, 2019. VOA

Indeed, during his annual State of the Nation address before Russia’s Federal Assembly on Wednesday, President Vladimir Putin, who has been faced with record-low approval ratings, even made a fairly explicit reference to Calvey’s detention.

“To achieve … great (economic) objectives, we must get rid of everything that limits the freedom and initiative of enterprise,” Putin said. “Honest businesses should not live in fear of being prosecuted of criminal or even administrative punishment.”

Putin, who met Calvey multiple times since the American arrived in Russia in the mid-1990s, has said he had no foreknowledge of Calvey’s arrest, and that despite his repeated calls to keep commercial disputes and litigation from culminating in spurious charges against foreign investors, he has no direct influence over how Russian courts render their verdicts.

FILE - CEO and co-founder of the investment fund Hermitage Capital Management Bill Browder attends the "Prospects for Russia after Putin" debate in the Houses of Parliament, London on Nov. 18, 2014.
CEO and co-founder of the investment fund Hermitage Capital Management Bill Browder attends the “Prospects for Russia after Putin” debate in the Houses of Parliament, London on Nov. 18, 2014. VOA
 

Vocal Kremlin critics, such as Hermitage Capital co-founder Bill Browder, are deeply skeptical of these claims.

“The arrest of Mike Calvey in Moscow should be the final straw that Russia is an entirely corrupt and (uninvestable) country,” Browder said in a tweet Friday. “Of all the people I knew in Moscow, Mike played by their rules, kept his head down and never criticized the government.”

Browder was denied entry into Russia in 2005 after his lawyer, Sergei Magnitsky, began investigating governmental misconduct and corruption in response to suspicious tax evasion charges brought against Hermitage by Russia’s Interior Ministry.

Magnitsky died under suspicious circumstances in Russian custody in 2009.

Seen as a ploy

For someone like Browder, it would seem Putin’s claim of political impotence in the face of a fully independent judiciary, despite copious historical evidence to the contrary, is nothing more than a cynical public relations ploy meant to portray Russia as a nation of procedural law, while denying justice and consular access to the very foreigners who fastidiously try to abide it.

Even prominent Putin allies, such as Russia’s ex-finance minister Alexei Kudrin, have sounded the alarm, calling Calvey’s arrest an “economic emergency.”

FILE - Alexis Rodzianko talks to Reuters in Moscow, Sept. 16, 2009.
 Alexis Rodzianko talks to Reuters in Moscow, Sept. 16, 2009. VOA

For U.S. citizen Alexis O. Rodzianko, president of the American Chamber of Commerce in Russia and a longtime Moscow resident, the initial shock of Calvey’s detention might, however ironically, reveal a longer-term opportunity to recalibrate Russia’s ties with foreign investors.

“Sure, at this point it’s damaging. It certainly makes every one of us who were here thinking about, ‘Well, you know, how far is it from me to his prison cell?’” he told VOA. “But I think it could be a defining issue for the business climate here. It could be the beginning of a bad streak, or it could be the signal for Russia to actually take some positive action.”

Rodzianko, who’s convinced the charges against Calvey are without legal merit, said he’s personally convinced the arrest stemmed from “a commercial dispute in the usual sense,” and that “people who set it up were not expecting the resonance that it (has) received.”

Asked if he thought Calvey’s arrest could be in any way politically motivated, he said he was convinced it was not.

“But then I think, in the circumstances, it can’t but be political, just because of the current state of affairs, because of the current state of relations,” Rodzianko said. “It’s just too easy to make that connection, which I don’t think is a proper connection, but I don’t see how it can be avoided.

Two possible outcomes

“I think it’s a symptom of a problem that Russia has, and Russia has to deal with,” he added. “It could (have one of) two outcomes.”

One, he said, is that Calvey’s arrest will come to signify a continuation of a malevolently corrupt practice that Russian and foreign investors have come to “face on an endemic basis.”

Also Read: Billion-Dollar Business Goes To The Dog Walkers

Or, “it might actually be a mistake which leads to significant reform, which might improve the situation for both foreigners and Russians investing in Russia,” Rodzianko said.

A spokeswoman for the Moscow district court said that Calvey, who was detained along with other members of the firm on suspicion of stealing $37.5 million (2.5 billion rubles), faces up to 10 years in prison if convicted. (VOA)

Next Story

U.S. Government Human Rights Report Shows ‘Amber’ Warning Light Situation in Hong Kong

"Human rights issues included substantial interference with the rights of peaceful assembly and freedom of association [and] restrictions on political participation," the report said.

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The flags of Hong Kong (left) and its communist ruler China, in file photo. RFA

A U.S. government human rights report is ‘an amber light’ for the human rights situation in Hong Kong, with some of the city’s traditional freedoms under threat, commentators told RFA.

The State Department highlighted several areas of concern in its 2018Human Rights Report published last week, in particular, “encroachment” by the ruling Chinese Communist Party in Beijing on Hong Kong’s promised autonomy.

“Human rights issues included substantial interference with the rights of peaceful assembly and freedom of association [and] restrictions on political participation,” the report said.

The report cited multiple sources as saying that Chinese operativesmonitored some political activists, nongovernmental organizations(NGOs), and academics who criticized Beijing’s policies in Hong Kong,which is supposed to be separate legal jurisdiction under the terms of the “one country, two systems” framework.

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The move came as the Hong Kong Journalists Association warned ofincreasing self-censorship among local journalists, often among mediaoutlets with business interests in mainland China. VOA

It also pointed to cross-border detentions and abductions, citing thedisappearance of businessman Xiao Jianhua and the cross-border rendition of Hong Kong bookseller Gui Minhai, who is a Swedish citizen.

“Xiao’s and other abductions show the Chinese Central Government’swillingness to act contrary to the rule of law and undermine Hong Kong’s autonomy,” the report said.

It said Hong Kong and Chinese officials had restricted, or sought to restrict, the right to express or report on political protest and dissent, particularly the notion of independence for Hong Kong.

U.S.

“But if Hong Kong’s human rights situation continues to deteriorate in the next couple of years … for example, if we see more kidnappings, then I think the U.S. is very likely to abolish Hong Kong’s status as a separate trading territory.” VOA

The trial of dozens of protesters, including key figures, after the 2014 Occupy Central pro-democracy movement on public order charges had”raised the cost of protesting government policies and led to concerns the government was using the law to suppress political dissent.”

The report also cited the jailing of two disqualified lawmakers, Sixtus Leung and Yao Wai-ching, last June for four weeks on “unlawful assembly” charges, following scuffles with Legislative Council security guards in 2016.

It said the banning of the pro-independence Hong Kong National Party(HKNP) last September was one example, while the disqualification of six pro-democracy lawmakers for “improperly” taking their oaths of allegiance was another.

The U.K.’s Foreign and Commonwealth Office (FCO) voiced concern at thetime over the ban, which relied on colonial-era legislation under theSocieties Ordinance that originally targeted criminal organizations, or “triads.”

“The UK does not support Hong Kong independence, but Hong Kong’s highdegree of autonomy and its rights and freedoms are central to its way of life, and it is important they are fully respected,” the statement said.

‘An amber light’

Hong Kong political commentator Sang Pu said the State Departmentreport had struck a note of warning to the international community.

“I don’t think this is a red light, but it is an amber light,” Sang told RFA, adding that a further deterioration could affect Hong Kong’s international reputation as an open port.

“But if Hong Kong’s human rights situation continues to deteriorate in the next couple of years … for example, if we see more kidnappings, then I think the U.S. is very likely to abolish Hong Kong’s status as a separate trading territory.”

Another red flag would be the enactment of sedition, subversion andnational security laws, as mandated by Article 23 of the city’s mini-constitution, the Basic Law, Sang said.

Meanwhile, a national law passed by Beijing in September 2017“criminalizes any action mocking the Chinese national anthem and requires persons attending public events to stand at attention and sing the anthem in a solemn manner during its rendition,” the State Department report said, adding that Hong Kong will soon legislate to make the law apply in its own jurisdiction.

It also pointed to the effective expulsion from Hong Kong, the first since the handover, of Financial Times Asia news editor Victor Mallet, after he hosted at event at the Foreign Correspondents’ Club featuring HKNP founder Andy Chan as the speaker.

The move came as the Hong Kong Journalists Association warned ofincreasing self-censorship among local journalists, often among mediaoutlets with business interests in mainland China.

Pro-democracy lawmaker Alvin Yeung, who also heads Hong Kong’s CivicParty, said he shares concerns over Hong Kong’s reputation.

“Our most important competitor, Singapore, has free trade agreements with pretty much the rest of the world, and Hong Kong is lagging behind,” Yeung said.

Also Read: North Korean Authorities Ramping Up The Levels of Strictness at Weekly Self-Criticism Sessions

“Our international image is probably that Hong Kong wouldn’t be capable of such a thing,” he said. “Other countries might not be interested in pursuing free trade agreements with Hong Kong, because there are no benefits to doing so.”

But pro-Beijing lawmaker Priscilla Leung said Hong Kong remains a free society.

“We have a very high level of human rights protection,” Leung said. “I hope they aren’t going to suppress our economic freedom under the guise of human rights.” (RFA)