US investor charged in Moscow released to house arrest

A Russian court on Thursday released from jail a U.S. investor who faces charges of embezzlement and placed him under house arrest.

Michael Calvey had been behind bars since mid-February on charges of embezzlement from the Russian bank Vostochny, in which his investment firm Baring Vostok has a controlling stake.

Baring Vostok is one of the largest foreign investment firms in Russia and the arrest of Calvey shook investors' confidence in Russia.

One of Calvey's co-defendants, former bank chairman Alexei Kordichev, also was granted release into house arrest. But in granting that move, the court said Kordichev had admitted guilt and testified against other figures, Russian news reports said.

Details of Kordichev's testimony were not immediately known. Four others charged in the case remain in jail.

Baring Vostok has said the case results from a dispute between bank shareholders. Calvey denies wrongdoing.

The case alleges that Calvey took a 2.5-billion-ruble ($37 million) loan from the bank and that in turn he transferred to the bank his shares in a company called IFTG that he said were worth the amount of the loan, but were actually worth far less.

Calvey on Thursday proposed the dispute be resolved by the bank selling the IFTG shares, saying he believed such a sale would fetch at least 2.5 billion rubles ($37 million).

Thursday's decision came a day after Russia's Investigative Committee asked to change his detention terms. The application cited his charitable work, investments in Russia and a large number of people supporting him.

"Changing the preventive measures in Calvey's case for house arrest is a good sign for the investment climate," Economic Development Minister Maxim Oreshkin said Thursday, according to state news agency Tass.

Calvey's arrest shocked the Moscow business community because he had avoided political controversy and helped develop Russian tech companies.

His house arrest will be valid for three days, then its extension considered.