Norman, fearing that Starosselsky could be successful or could provoke the Cossack contingent in Tehran to stage a mutiny, sent an agitated message to the Shah to reprimand Starosselsky for his disobedience, order him to reliquish his command to the designated Persian officer and return to Qazvin. Norman warned that otherwise Starosselsky would be sent back to Qazvin under arrest. At the intervention of the former Czarist envoy to Iran who had remained in Tehran after the Russian Revolution, it was agreed that Starosselsky would return to Qazvin the same evening and the British Legation would give him a written guarantee that he and his family could travel to Paris by way of Mesopotamia free from interference or molestation. According to the Czarist envoy, Starosselsky had demanded a written guarantee of safe passage because he feared Norman would have him assassinated. Starosselsky returned to Qazvin and left the countiy on 6 November. A major impediment to British plans in Iran had departed from the scene. After a brief stay in Paris Starosselsky left for the United States where he settled. He left no papers or diaries.
There are conflicting views concerning the misappropriation of funds by Starosselsky. Lt Col. Henry Smyth, the British officer who worked with the Cossacks, had discovered the total number of Cossack troops at the Qazvin camp to be about 3,000 with another 500 on leave and accounted for. Starosselsky had a ledger sheet that showed 4,500 troops and collected provisions and pay for 4,500. These 1,000 ‘blank files’ enabled him and the other Russian officers to pocket the difference. On the other hand the United States Minister to Tehran, John Caldwell, reported to the State Department, ‘I cannot believe a man of Moshir ed Dowleh’s character would acquiesce in any crooked deal or offer himself up as a martyr on a political throne, if he believed the charge of dishonesty made against the Russian officers were well founded. The proof of the charge has never been made public... Caldwell then added. ‘People have no faith in the Soviet Treaty but they welcome anything in order to be freed from the British and think not of how much worse the future may be... The British policy in Persia of force and money has proven as disastrous to themselves as it has to the Persians... Persia always seems to be between the devil and the deep sea, but somehow lives in spite thereof.
All thoughts that Curzon would now be pacified by the removal of Starosselsky and the resignation of Pirnia were soon dispelled. Curzon left no doubt about his reaction to these events in the opening paragraph of his telegram to Norman on 29 October: "I find some difficulty in forming or expressing an opinion on a situation in which there appears to have been a complete volte face in Persian policy, and in which I am again presented in this case without the slightest warning with a fait accompli. Till a week ago I had been led by you to believe that success of British policy in Persia was inseparable from Premiership of Mushir ed Dowleh (Pirnia), summons of Medjliss by him, suspension of Anglo-Perslan Agreement in interim and toleration and support of Starosselsky... In these circumsances I m ust leave it to you and General Ironside to deal with a situation which appears suddenly to have developed since arrival of latter and which no instructions from this end can avail to control. In deciding upon new policy... you will doubtless recognise that General Ironside and yourself have assumed no slight responsibility which will require the justification of success’." Curzon also rejected demands made by the Shah for the restoration of his monthly subsidy and permission to travel to Europe.
A few days later, once Curzon had had time to overcome the shock of the new developments engineered by his envoy, he instructed Norman to press the new Government to convene parliament as soon as possible and decide on the fate of the Agreement. Curzon rejected the continuance of the monthly government subsidy and advised Norman to tell Sepahdar to seek needed funds from APOC. Curzon however, agreed to pay for the cost of reorganisation and maintenance of the Cossack Division for the time being, since British officers were to assum e command. In late September the Iranian Government represented by Sidney Armitage Smith had already reached agreement with APOC for partial payment of royalty arrears.