By Lev Sergeev and Alexander Marrow

MOSCOW (Reuters) – A Russian court on Friday handed U.S. investor Michael Calvey a 5.5-year suspended sentence for embezzlement, a day after finding him guilty, in a case that has rattled Russia’s business community.

Calvey, the founder of Russia-focused private equity group Baring Vostok, was detained along with other executives in early 2019 on charges of embezzlement linked to mid-sized lender Vostochny. He and the executives deny the charges.

“The court, unfortunately, didn’t or couldn’t understand substance of the case with no victim, no damage and no beneficiary,” Calvey told reporters outside the court after the more than 12-hour-long sitting was over.

Calvey will not be allowed to change his permanent place of residence in the next five years without informing Russian prison authorities, the verdict said.

“Compared to most cases receiving a suspended sentence is already almost a victory but, on the other hand, it is simply outrageous to be convicted of a crime that never happened,” Calvey said.

The court handed French national Philippe Delpal, a partner at the fund, a suspended sentence of 4.5 years.

“Our colleagues are innocent, and both the criminal case and the verdict handed down by the court are groundless”, Baring Vostok said about the verdict in a statement.

The case prompted several prominent officials and businessmen to voice concerns about the way the state deals with commercial disputes and executives caught up in them.

Calvey last month told a court that an innocent verdict in his case would trigger billions of dollars in foreign investment and help create thousands of new jobs.

The state prosecutor asked for the six-year suspended sentence over a 2.5 billion rouble ($34.04 million) embezzlement charge.

Initially placed in pre-trial detention and then house arrest, Calvey and his colleagues saw their restrictions ease in November, a move hailed at the time by the head of Russia’s sovereign wealth fund as an important signal to all the investment community.

Sovcombank, Russia’s third biggest private bank and among the country’s top 10 by assets agreed to buy Vostochny Bank, the small lender at the heart of the dispute, in March, but did not disclose financial terms of the deal.

The corporate dispute between Vostochny’s top shareholders – Baring Vostok and businessman Artem Avetisyan’s Finvision – was settled in October.

Baring Vostok has invested more than $2.8 billion in projects in Russia since 1994, including in internet giant Yandex, online bank Tinkoff and e-commerce firm Ozon, which enjoyed a successful Nasdaq debut late last year.

($1 = 73.4358 roubles)

(Reporting by Lev Sergeev, Alexander Marrow and Maria Tsvetkova; Editing by Leslie Adler and David Gregorio)

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