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The Trump Organization’s problem with possible money laundering

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From Azerbaijan to Indonesia, Kazakhstan to the Republic of Congo, allegedly corrupt foreign officials have parked their money in Trump buildings time and again.

Over the past two decades, invest­ing in lux­u­ry real estate has become one of the go-to means of laun­der­ing dirty mon­ey. It’s hap­pen­ing almost every­where real estate is appre­ci­at­ing quick­ly: Manhattan, Paris, Malibu, London, Miami, and Hawaii are all tar­gets, as well as every­where from Boston to Buffalo to Boise. The abil­i­ty to pur­chase high-dol­lar real estate via anony­mous shell com­pa­nies has helped an untold num­ber of crooks and klep­to­crats wash their ill-got­ten gains and pro­tect their wealth from pry­ing eyes.

These klep­to­crats and cor­rupt for­eign offi­cials, of course, couldn’t have done it them­selves. They required the help of “enablers“: lawyers, accoun­tants, com­pa­ny-for­ma­tion agents, and devel­op­ers who glad­ly helped with trans­ac­tions, tak­ing their own cuts along the way. While klep­to­crat­ic for­eign offi­cials gut­ted their own home coun­tries’ finances, and engaged in grand cor­rup­tion, indi­vid­u­als in Western democ­ra­cies helped or turned a blind eye to signs of mon­ey laun­der­ing time and again.

Trump’s first kleptocrat

One was a bru­tal Haitian dic­ta­tor. One was a bur­geon­ing real estate devel­op­er. And both want­ed what the oth­er had.

This abil­i­ty to park these stolen gains in Western real estate has been, unfor­tu­nate­ly, per­fect­ly legal over the past few decades. For exam­ple, American lawyers can set up untrace­able com­pa­nies on clients’ behalf, watch their clients use those com­pa­nies to pur­chase real estate, and sub­se­quent­ly claim attor­ney-client priv­i­lege for the trans­ac­tion. Canada per­mits the for­ma­tion of anony­mous shell com­pa­nies, and British ter­ri­to­ries have pushed back against reg­istries track­ing com­pa­ny own­er­ship. Australian author­i­ties even hes­i­tat­ed to impose anti-mon­ey laun­der­ing restric­tions on accoun­tants.

In the U.S., one ben­e­fi­cia­ry of the influx of for­eign offi­cials’ mon­ey is the cur­rent pres­i­dent. For decades, as mul­ti­ple news reports and inves­ti­ga­tions have found, President Donald Trump’s build­ings — those he helped build and those to which he licensed his name — have drawn alleged klep­to­crats who may be look­ing to fun­nel some of their mon­ey out of their coun­tries.

Both Trump and the Trump Organization have denied that they engaged in any illic­it activ­i­ty in attract­ing the funds, and denied any wrong­do­ing along the way — as do all of these relat­ed for­eign offi­cials. But for years, Trump and his busi­ness part­ners may have prof­it­ed from the con­tin­ued will­ing­ness of Western gov­ern­ments to per­mit for­eign actors — arms deal­ers and nar­co-traf­fick­ers, dic­ta­to­r­i­al rulers and their cronies — to set up anony­mous shell com­pa­nies, skirt past anti-mon­ey laun­der­ing checks, and stash their mon­ey in New York or London or Paris.

All of this was, for years, per­fect­ly legal. Due to new require­ments out of the Treasury Department, which reveals the iden­ti­ty of the actu­al own­er of numer­ous pur­chas­es across cer­tain cities in the U.S., the best days of laun­der­ing-via-real-estate in American real estate may be behind us. But that hasn’t stopped Trump prop­er­ties from prof­it­ing from anony­mous shell com­pa­nies to this day, as we’ve seen hap­pen­ing recent­ly at the Trump International Hotel and Tower in Vancouver.

Now, two years into Trump’s pres­i­den­cy — and thanks large­ly to the work of pro-trans­paren­cy activists — details have final­ly begun to emerge about the alleged klep­to­crats and for­eign cor­rupt offi­cials who were drawn to invest­ing in Trump-linked prop­er­ties.

A num­ber of for­eign rul­ing fam­i­lies and offi­cials turned to apart­ments and build­ings linked to Trump’s com­pa­nies to safe­guard their funds. Some are still in pow­er. Some have since been deposed. But their involve­ment in Trump-linked prop­er­ties rais­es any num­ber of ques­tions about poten­tial influ­ence they may have on the pres­i­dent, giv­en his con­tin­ued involve­ment in the Trump Organization. While Trump and his asso­ciates have denied that the exis­tence of such finan­cial involve­ment has had any undue influ­ence over his work as pres­i­dent, plen­ty of oth­ers — includ­ing con­gres­sion­al Democrats — believe oth­er­wise

The Republic of Congo

Who: The rul­ing Sassou-Nguesso fam­i­ly
Where: Trump International Hotel & Tower, New York
Context: Last month, promi­nent anti-cor­rup­tion watch­dog Global Witness, which often tracks illic­it funds mov­ing from cor­rupt offi­cial into the West, uncov­ered that the daugh­ter of the long-time ruler of the Republic of Congo, Denis Sassou-Nguesso, had alleged­ly pil­fered mil­lions of dol­lars from state cof­fers to pur­chase a lux­u­ry apart­ment at the Trump International Hotel & Tower in New York. While there’s no indi­ca­tion the Trump Organization broke the law, Global Witness unearthed prop­er­ty doc­u­ments list­ing assort­ed trans­ac­tions that showed Claudia Sassou-Nguesso alleged­ly used a Portuguese mid­dle-man to move mil­lions through a shell com­pa­ny, then used an American law firm to pur­chase a $7.1 mil­lion unit over­look­ing Central Park. (For years, allow­ing shell com­pa­nies to pur­chase real estate was not ille­gal in New York, although those behind shell com­pa­nies now have to iden­ti­fy who the ben­e­fi­cial own­er of said com­pa­ny is.)

None of the enti­ties involved — includ­ing the Trump Organization and the hotel’s board — raised any red flags about why the daugh­ter of the Republic of Congo’s dic­ta­tor, who has remained in pow­er for over two decades, would have the means to spend mil­lions on an apart­ment in the Trump build­ing. The Republic of Congo gov­ern­ment, mean­while, claimed that the entire pur­chase was a “pri­vate affair” and that the con­tract at the heart of the claims is clean.

The apart­ment pur­chase pales in com­par­i­son to the near­ly $70 mil­lion the Sassou-Nguesso fam­i­ly has spent on lux­u­ry goods and real estate in France. Because President Trump per­son­al­ly ran the com­pa­nies that may have prof­it­ed from the deal through the 2016 cam­paign, the Democratic-led House is in the process of sub­poe­naing records about the president’s finances, which would shed some light on the trans­ac­tion.

Haiti

Who: Former Haitian dic­ta­tor Jean-Claude “Baby Doc” Duvalier
Where: Trump Tower, New York
Context: Kleptocrats’ desires for Trump-linked con­dos stretch­es back decades: The first known deal between Trump and a blos­som­ing klep­to­crat hap­pened in 1983, when Haitian dic­ta­tor Jean-Claude “Baby Doc” Duvalier snagged a $1.65 mil­lion unit in Trump Tower, which had just been com­plet­ed.

As Transparency International, an anti-graft orga­ni­za­tion focused on com­bat­ing grand cor­rup­tion, tab­u­lat­ed, Duvalier pil­fered some $800 mil­lion from Haitians in the 1970s and ’80s, mak­ing Duvalier one of the most noto­ri­ous, and lucra­tive, klep­to­crats in the past half-cen­tu­ry. Switzerland in 2011 passed anti-mon­ey laun­der­ing leg­is­la­tion col­lo­qui­al­ly known as “Lex Duvalier.”

As with oth­ers, Duvalier used mid­dle­men and cut-outs to pur­chase the apart­ment, includ­ing American lawyers and a French friend. But Duvalier didn’t hide his tracks well. As inves­ti­ga­tors lat­er uncov­ered, Duvalier loot­ed the state trea­sury via writ­ing checks — some of which, accord­ing to one of the inves­ti­ga­tors hired by the Haitian gov­ern­ment to track down Duvalier’s loot, includ­ed “Apartment in Trump Tower” writ­ten on them. The Trump Organization has denied any wrong­do­ing.

Azerbaijan

Who: Former Transportation Minister Ziya Mammadov
Where: Trump International Hotel and Tower, Baku, Azerbaijan
Context: Rather than park his mon­ey in a high-end real estate pur­chase, Mammadov part­nered with the Trump Organization to con­struct a brand new build­ing.

Trump’s project with Mammadov, slat­ed to rise in Azerbaijan’s cap­i­tal of Baku, even­tu­al­ly fell apart due to sag­ging demand and late pay­ments from Trump’s Azeri part­ners, accord­ing to The New Yorker. But before Trump Hotel Baku col­lapsed, the project was taint­ed by seri­ous finan­cial malfea­sance. From Mammadov’s alleged con­nec­tions to Iran’s Revolutionary Guard Corps front com­pa­nies to the fact that the Trump Organization attempt­ed to build the project in the midst of the Azeri regime’s trans­for­ma­tion into a klep­to­crat­ic dic­ta­tor­ship, there’s a rea­son The New Yorker dubbedthe build­ing Trump’s “worst deal.” (The Trump Organization denied that it knew about any of Mammadov’s alleged cor­rup­tion, or his alleged ties to Iran’s Revolutionary Guard Corps.)

And then there’s Mammadov him­self. Described by one U.S. State Department offi­cial in a leaked cable as “noto­ri­ous­ly cor­rupt even for Azerbaijan,” While he’s denied par­tic­i­pa­tion in any cor­rupt activ­i­ties, Mammadov stands at the cen­ter of a pat­tern of alleged cor­rup­tion across the coun­try. Or he did until recent­ly: In 2017, the Azeri dic­ta­tor announced that he’d fired Mammadov from his post as trans­porta­tion min­is­ter. The rea­son? Mammadov’s alleged cor­rup­tion.

Kazakhstan

Who: Former Kazakhstani offi­cial and oli­garch Timur Kulibayev
Where: Trump Tower Batumi, Batumi, Georgia
Context: Earlier this year, Kazakhstan’s long-time dic­ta­tor Nursultan Nazarbayev announced he’d be step­ping down from the pres­i­den­cy after near­ly three decades in pow­er. While the country’s polit­i­cal future is sud­den­ly uncer­tain, one name has con­sis­tent­ly been bandied about as a poten­tial suc­ces­sor: Timur Kulibayev, Nazarbayev’s son-in-law and one of the most pow­er­ful busi­ness­men in the coun­try.

Kulibayev is worth some $3 bil­lion, and has pre­vi­ous­ly been con­nect­ed to ques­tion­able deal­ings in the West, includ­ing sig­nif­i­cant­ly over­pay­ing for a London-area man­sion once owned by Prince Andrew. (He’s denied any alle­ga­tion of finan­cial malfea­sance, as has the Trump Organization.)

After Trump’s deal in Georgia first came online in 2011, Kulibayev’s busi­ness­es signed on to help finance Trump Tower Batumi, a planned enclave full of con­dos along Georgia’s Black Sea coast­line. As McClatchy described,  thebuilding’s fund­ing was also con­nect­ed to the scan­dal-plagued BTA Bank, which had recent­ly been over­seen by for­mer Kazakhstani oli­garch Mukhtar Ablyazov. (BTA Bank recent­ly sued for­mer Trump asso­ciate Felix Sater regard­ing the Trump Organization’s pro­posed plans to con­struct a Trump Tower in Moscow, although this law­suit is not relat­ed to the plans in Georgia. Sater is fight­ing the suit.) Despite a ground­break­ing cer­e­mo­ny in 2012, the plans for the Georgian tow­er even­tu­al­ly fal­tered, and the Trump Organization has since pulled out.

Kazakhstan

Who: Former Almaty may­or Viktor Khrapunov
Where: Trump SoHo, New York
Context: One of the unfor­tu­nate real­i­ties of the post-Soviet space is that many of the nom­i­nal “pro-democ­ra­cy” oppo­nents of the cur­rent dic­ta­to­r­i­al regimes made their own for­tunes in much the same way as regime insid­ers. Such is the case in Kazakhstan, where Viktor Khrapunov is want­ed on alle­ga­tions of swip­ing some $300 mil­lion via all man­ner of cor­rupt deal­ings while may­or of Almaty, Kazakhstan’s largest city. (Khrapunov denies the charges.)

Thanks to ongo­ing court cas­es sur­round­ing Khrapunov’s wealth, the pub­lic has learned that Khrapunov’s step-daugh­ter owned three apart­ments at the for­mer Trump SoHo apart­ment build­ing in New York. The funds used to pur­chase the units alleged­ly wound through assort­ed off­shore shell com­pa­nies, as well as a for­mer bank linked to ter­ror­ist financ­ing. The hotel pur­chas­es were appar­ent­ly made to try to estab­lish Khrapunov’s step-daughter’s U.S. res­i­den­cy, but they also helped her father hide some funds fun­neled out of Kazakhstan. (The Trump Organization denies any wrong­do­ing.)

The Philippines

Who: Special envoy to the U.S. for Trade, Investment, and Economic Affairs Jose E.B. Antonio
Where: Trump Tower at Century City, Manila, Philippines
Context: Before his appoint­ment as Filipino spe­cial envoy to the U.S., Jose E.B. Antonio had steered Century Properties Group, a Filipino com­pa­ny that helped finance the con­struc­tion of the $150-mil­lion Trump Tower in Manila. There are ques­tions aplen­ty about Trump’s ongo­ing involve­ment with this Trump Tower, but the president’s most recent finan­cial dis­clo­sures indi­cate that his com­pa­nies were, as of 2016, still prof­it­ing from the build­ing.

Antonio’s involve­ment with a Trump prop­er­ty while liais­ing direct­ly with Washington on behalf of Manila rais­es a raft of eth­i­cal ques­tions — not least of which how the White House will ensure that Trump’s pri­vate inter­ests don’t cloud American inter­ests in its rela­tion­ship with the Philippines. (The Trump Organization has denied that the president’s for­eign entan­gle­ments, like those with the Philippines, have affect­ed American pol­i­cy.) Meanwhile, while there’s no indi­ca­tion Antonio has engaged in grand cor­rup­tion, he remains one of the wealth­i­est scions in the Philippines, a coun­try that Transparency International recent­ly ranked among the bot­tom half of the most cor­rupt coun­tries in the world.

Indonesia

Who: Vice pres­i­den­tial can­di­date and bil­lion­aire Hary Tanoesoedibjo (Hary Tanoe)
Where: Trump International Hotel and Tower Bali, Bali, Indonesia; Trump International Hotel Lido, Java, Indonesia
Context: Described by The New York Times as a “bil­lion­aire media mogul with his own polit­i­cal ambi­tions,” Hary Tanoe’s vice pres­i­den­tial run in 2014 ulti­mate­ly fell short. But that hasn’t stopped Tanoe from dream­ing of future polit­i­cal prospects. Even after that unsuc­cess­ful run, Tanoe has hint­ed that his future lies in pol­i­tics — includ­ing at the pres­i­den­tial lev­el.

Amidst these flir­ta­tions with pub­lic office, Tanoe entered into a part­ner­ship with Trump to help finance con­struc­tion of two so-called “six-star” lux­u­ry resorts in Bali and West Java. Trump’s com­pa­ny agreed to the part­ner­ship despite Tanoe’s dubi­ous finan­cial his­to­ry, which includes gov­ern­men­tal alle­ga­tions of tax fraud that have fol­lowed him the past few years — and the fact that he was banned from trav­el­ing abroad in 2017 after alleged­ly send­ing threat­en­ing text mes­sage to Indonesia’s deputy attor­ney gen­er­al, as the Financial Times report­ed.

Tanoe’s work with Trump has raised plen­ty of unan­swered ques­tions. Some of them have to do with con­cerns about access­ing Chinese state funds to finance Tanoe’s projects, which, if true, would link Trump direct­ly a Chinese state-owned com­pa­ny — at a time when ten­sions between Beijing and Washington are greater than they’ve been in decades. Given how involved Trump has been in craft­ing U.S.-China poli­cies, the poten­tial for Chinese invest­ment in the Indonesian prop­er­ty offers Beijing lever­age against the American pres­i­dent, an unprece­dent­ed sit­u­a­tion in the his­to­ry of Sino-American rela­tions. (Tanoe denies any wrong­do­ing, and the Trump Organization has stood by its Indonesian projects and part­ners.)

Former Soviet Union

Who: Former Soviet offi­cial Tevfik Arif
Where: Trump SoHo, New York; Trump International Hotel and Tower Fort Lauderdale, Fort Lauderdale, Florida; Trump International Hotel & Residences Phoenix, Phoenix, Arizona; Trump Tower Moscow, Moscow, Russia
Context: No list of links between Trump busi­ness­es and dubi­ous for­eign offi­cials would be com­plete with­out a nod to the ongo­ing ques­tions sur­round­ing the Trump campaign’s involve­ment with Russia. While Arif, a Kazakhstan-born for­mer Soviet offi­cial, wasn’t men­tioned in the final report from spe­cial coun­sel Robert Mueller, Arif’s finan­cial entan­gle­ments with Russia date back years.

The founder of Bayrock Group and busi­ness part­ner of Felix Sater (who once wrote that he and for­mer Trump lawyer Michael Cohen would “get Putin on this pro­gram and we will get Donald elect­ed”), Arif’s finan­cial his­to­ry is poten­tial­ly the murki­est of all the cur­rent and for­mer gov­ern­men­tal offi­cials Trump’s com­pa­nies have worked with. Some of the projects panned out (such as one in Florida), while oth­ers nev­er got off the ground (such as one in Moscow).

Still, Arif’s Bayrock repeat­ed­ly helped fund Trump-linked projects, as mul­ti­pleinves­ti­ga­tions have found. (Arif and the Trump Organization have denied any finan­cial wrong­do­ing.) Arif’s con­tin­ued abil­i­ty to use Bayrock to keep Trump-linked prop­er­ties afloat a decade ago raised numer­ous eye­brows, espe­cial­ly giv­en that much of the source of his financ­ing remained ulti­mate­ly unclear — and much of which emerged from the noto­ri­ous­ly cor­rupt for­mer Soviet space. Even more notably, Arif’s Bayrock act­ed, as Bloomberg’s Timothy O’Brien wrote, as a “bridge” between Trump and Russian investors, accel­er­at­ing the ques­tions that con­tin­ue to cir­cle the pres­i­dent even after the com­ple­tion of the Mueller report.

Author:
CASEY MICHEL

Original source: Think Progress

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