“It’s a horrible law and it should be changed”
----Donald J. tRUMP on the Foreign Corruption Practices Act.
“Why would someone put a luxury hotel there? Nobody who can afford to stay there would want to be in that neighborhood.” Said a former top official in Azerbaijan’s Ministry of Tourism (1). Originally intended as a high-end apartment building the Trump Organization, after signing multiple contracts with Azerbaijani developers quickly began transforming the “tower into an ‘ultra-luxury’ property…with ‘spectacular views of the city and the Caspian Sea’”. It was a strange location for such a grandiose undertaking for “the Trump Tower Baku is in an oddly unglamorous location; the underdeveloped eastern end of downtown, which is dominated by train tracks and is miles from the main business district…Across the street from the hotel is a discount shopping center; the area is filled with narrow dingy shops and hookah bars. Other hotels nearby are low-budget options…there are no upscale restaurants or shops. Any guests of the Trump Tower Baku would likely feel marooned.” (2)
Indeed, the building is virtually encircled by highways, on and off ramps the tangle of which presented “New Yorker” magazine’s reporter-at-large Adam Davidson with a “comical exchange with a taxi-driver who had no idea which combination of turns would lead to the building’s entrance”. Given the difficulty in reaching the building as well as its placement within the matrix of the city, Davidson said that “the more time I spent in the neighborhood, the more I wondered how the hotel could have been imagined as a viable business” (3). Why and how indeed.
Davidson further elaborates that by the time the Trump Organization entered the picture the construction boom in Baku had ended “and the occupancy rate for luxury hotels in the city hovered around thirty-five percent. Jan deRoos, of Cornell University, who is an expert in hotel finance, told me (Davidson) that the developer of a five-star hotel typically must demonstrate that the project will maintain an average occupancy rate of at least sixty percent for ten years. There is a long-term master plan to develop the area around Trump Tower Baku, but if it is implemented the hotel will be surrounded for years by noisy construction projects, making it even less appealing to travelers desiring a luxurious experience—especially considering that there are many established hotels on the city’s seaside promenade.” (4)
As with launching his home mortgage adventure on the cusp of the real estate collapse of 2007-8, tRUMP, once again demonstrating his flawless business acumen and with consummate timing jumped into the middle of a construction project that made little sense. The question is: why?
“According to the Transparency International Corruption Perception Index”, writes Davidson, “Azerbaijan is among the most corrupt nations in the world” and “(t)he Azerbaijanis behind the project were close relatives of Ziya Mammadov, the Transportation Minister and one of the country’s wealthiest and most powerful oligarchs…at the time of the hotel deal Mammadov, a career government official, had a salary of about twelve thousand dollars, but he was a billionaire” (5). In reports by major news organizations (6) citing “a series of cables sent from the U.S. Embassy in Azerbaijan in 2009-2010, which were made public by WiKiLeaks” …Ziya Mammadov is described “as notoriously corrupt even for Azerbaijan”.
According to Alan Garten, then legal advisor to the Trump Organization, tRUMP played a ‘passive role’, merely “allowing his famous name to be used by a company headed by Ziya Mammadov son Anar (net worth estimated at over a billion dollars)” for which he received, according to limited public filings at least 2.8 million dollars plus an additional 2.5 million in 2012. “The Washington Post published Garten’s description of the deal and reported that Donald Trump had ‘invested virtually no money in the project, while selling the rights to use his name and holding the contract to manage the property”’. (7)
But the tRUMPs were, as usual, less than completely forthcoming. Not only have they failed to fully disclose everything they were paid in the transactions, the deal tRUMP made with Anar also included Ziya’s brother Elton, then an “influential member of the Azerbaijan parliament. Elton signed the contracts, and in an interview…confirmed that he founded Baku XXI Century, the company that owns Trump Tower Baku.” He would not confirm who owns Baku XXI Century, citing a ‘commercial secret’, but “added that he ‘controlled all its operations’ until 2015, when he cut ties to the company” (8) about a year and a half before Donald J. tRUMP, upon being elected to the presidency, likewise did the same.
While there is presently no evidence of bribery, kick-backs, money-laundering or racketeering the Baku project nevertheless raises eyebrows. Real estate ventures, especially large real estate ventures, and very especially large real estate ventures that make little sense both in terms of location and immediate and mid-term viability, draw special attention of prosecutors and those familiar with the ancient arts of corruption. Large real estate projects involve thousands of contracts with suppliers, contractors, sub-contractors, and investors. Projects of this magnitude may have financial dealings that span the globe. These projects are perfect if one is looking to set up a shell company through which to launder money or bribe officials. Indeed, in this particular example “Alan Garten, the Trump Organization lawyer, did not deny that there was corruption involved in the project”. In fact, many of the contractors were paid in cash. Davidson was told that bribes were paid and that graft was routine. ‘I’m not going to sit here and defend the Mammadovs’ Garten said. But from a legal standpoint, he argued, the Trump Organization was blameless. In his opinion, the Foreign Corrupt Practices Act doesn’t apply to the Baku deal, even if corruption occurred. ‘We didn’t own it,’ he said of the hotel. ‘We had no equity, we didn’t control the project…” (9), therefore there could have been no violation of the law.
But, according to “Jessica Tillipman, an assistant dean at George Washington University Law School, who specializes in the F.C.P.A,…” you can’t go into business deals in Azerbaijan assuming that you are immune from the F.C.P.A…nor can you escape liability by looking the other way. The entire Baku deal is a giant red flag—the direct involvement of foreign government officials and their relatives in Azerbaijan with ties to the Iranian Revolutionary Guard. Corruption warning signs are rarely more obvious.”
“As the Mammadovs were preparing to build the tower, the family patriarch, Ziya, was cementing his financial relationship with the Darvishis, the Iranian family with ties to the country’s Revolutionary Guard.” “At least three Darvishis—the brothers Habil, Kamal, and Keyumars—appear to be associates of the Guard.” “A cable sent on March 6, 2009, from the U.S. Embassy in Baku described Kamal as having formerly run ‘an alleged Revolutionary Guard-controlled business in Iran.’ The company, called Nasr, developed and acquired instruments, guidance systems, and specialty metals need to build ballistic missiles. In 2007, Nasr was sanctioned by the U.S. for its role in Iran’s effort to develop nuclear missiles.” The cable also said that “Kamal had recently established ‘a close business relationship/friendship’ with Ziya Mammadov” leading to “at least eight major road construction and rehabilitation contracts, including contracts for construction of the Baku-Iranian Astara highway” (10).
The Revolutionary Guard has been identified by the United States as a “major supporter of Hezbollah and other international terrorist groups.
The question presents itself: what were the Darvishis seeking to gain through their dealings with the Mammadov’s? “Mounting international sanctions made it far more difficult for Iran to sell oil abroad, receive foreign funds, and import products. International banks became increasingly reluctant to accept funds from businesses owned by the Revolutionary Guard, severely limiting its ability to support allies such as Hezbollah and the Syrian government. At a moment when Iran was struggling to find ways to send money outside the country Keyumars Darvishi joined Azarpassillo (an Iranian Front Company) and began making one deal after another in Azerbaijan…It might also have caught the attention (of the Darvishis) that the Mammadovs had their own private bank—one that had unfettered access to the global financial system.
The trail is long and tortured. Ziya has been removed from his post, his son has lost his seat in parliament, and tRUMP has since backed out of the deal. But for several years tRUMP has prospered from deals that involved a business relationship with what the publication “Foreign Policy” called “The Corleones of the Caspian” (11) and, by extension, their associates with ties to the Iranian Revolutionary Guard and terrorist groups.
“American companies”, writes Davidson, “must insure that they are not receiving funds that originated with any sanctioned entity. Ignorance is not a defense, especially if there is ample warning that a foreign partner could have a link to such an entity. Most firms, upon hearing of even a slight chance of Iranian involvement, conduct due diligence that is much more extensive that what is typical for F.C.P.A compliance. Erich Ferrari, an attorney who specializes in sanctions-related legal cases, said that before the Trump Organization cashed any checks it should have been certain of the ‘source of the funds’— ‘not only the bank it was remitted from but how the Mammadovs actually earned the money they paid.’ He said of the Baku deal, ‘It takes a lot to shock a lawyer, but I’ve had very few clients do so little due diligence.’” (12)
tRUMP is seen here evidencing the same lack of ‘due diligence’ that he applied to vetting his first National Security Advisor Michael Flynn. He is also demonstrating his contempt for the law as well as his firm belief that the rules simply do not apply to him. In seeking his fortune snorkeling in the financial cesspools of the world, tRUMP may have, perhaps inadvertently, played an important albeit secondary role in supporting terrorism. For by lending his name he at a minimum helped legitimize what, by all accounts, was a very corrupt enterprise.
It is time for a full investigation.
Impeach and Imprison.
- Davidson, Adam. “Donald Trump’s Worst Deal” “The New Yorker” March 13, 2017
- Ibid. p. 50
- Ibid. p. 53
- Ibid. p. 54
- Ibid. p. 52
- Ibid. p. 55