“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
p. 48
- Ibid.
- Ibid
- Ibid.
- Ibid. p. 50
- Ibid.
- Ibid.
- Ibid.
- Ibid. p. 53
- Ibid. p. 54
- Ibid. p. 52
- Ibid. p. 55
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