(Bloomberg) -- The Kremlin said the arrest of Michael Calvey, founder of the private equity firm Baring Vostok Capital Partners, shouldn’t hurt the confidence of foreign investors in Russia and it’s “very closely watching” developments in the case.

President Vladimir Putin knows Calvey and met the American on numerous occasions, Kremlin spokesman Dmitry Peskov told reporters Monday. Calvey is “really a very big investor in the Russian economy,” and the Kremlin knows that he always encouraged foreign investment in the country, he said.

Political tensions between Russia and the U.S. are not a factor in the case, Peskov said. “Russia was, is and remains interested in creating favorable conditions for foreign investors and will continue to be,” he said. The benchmark Moscow Exchange reversed Friday’s gains, while the ruble strengthened for a second day.

A Moscow court on Saturday ordered Calvey, one of the country’s longest-standing American investors, held in custody until April 13 in an embezzlement case. Calvey’s lawyer said the investor maintains his innocence and will seek his release before trial. Calvey, three other Baring Vostok employees and two more people were detained in a case revolving around Russian retail lender Vostochny Express Bank, where the American is board chairman and his fund a majority owner.

A dispute had emerged between Calvey’s team and Vostochny shareholder Artem Avetisyan, who has ties to Russia’s security services, over control of the bank and its board. Avetisyan has declined to comment.

To contact the reporter on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net

To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Tony Halpin

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