The Trump Administration has been dogged by accusations that President Trump, as well as his family members and close associates, are seeking to use the presidency to advance their personal financial interests. While President Trump claims to have ceded control of the Trump Organisation to his sons Eric and Donald Jr., the trust set up is porous at best, and reports indicate that the president can withdraw money from his more than 400 businesses at any time without disclosure.

Just as President Trump will receive “quarterly” updates on the Trump Organisation from his son Eric, [The Global Corruption Blog] track and report on instances in which there are credible allegations of President Trump, his family, and his close associates exploiting their public power for private gain. [This is organised into the] following four categories, which capture four related but distinct ways that political leaders may seek to leverage the power of public office to enrich themselves, their families, and their cronies:

  1. U.S. Government Payments to the Trump Organisation
  2. Use of the Power of the Presidency to Promote Trump Brands
  3. U.S. Government Regulatory and Policy Decisions that Benefit Business Interests of the Trump Family and Senior Advisors
  4. Private and Foreign Interests Seeking to Influence the Trump Administration Through Dealings with Trump Businesses

 

4. Private and Foreign Interests Seeking To Influence the Trump Administration Through Dealings with Trump Businesses

Another significant concern is that individuals, private firms, and foreign governments may believe—rightly or wrongly—that they can curry favor with the Administration and increase their odds of favorable policy decisions by engaging in private business transactions with companies owned by or connected to President Trump—or, in the case of foreign governments, granting favorable regulatory treatment to Trump business operations in their countries. This is one of the most serious concerns related to the Trump family’s interest in profiting from the presidency, as it gives rise both to the appearance of corruption and the risk of actual corruption. The range of possible problems is too broad to summarize, but here are some examples of the leading sources of concern:

The Trump International Hotel in Washington, D.C.: A number of concerns center on the Trump International Hotel in Washington, D.C., and in particular on whether foreign governments, or agents of foreign governments, may seek to curry favor with the Trump Administration by booking rooms and events at the hotel. (The hotel, which substantially increased its room rates after the election, earned the Trump Organization roughly $20 million between January 2016 and April 2017, almost $2 million in profits.) While the Trump Organization claims to have donated all profits from foreign government spending at Trump hotels to the United States Treasury, the Organization has not disclosed the amount or how it was calculated, thus leaving us to take the President at his word. This is particularly troubling since the Organization itself previously noted that it would be “impractical” to “fully and completely” identify all foreign guests staying at the Trump hotels. And a leaked email from September 2017 indicated that, despite public assurances to the contrary, President Trump is “definitely still involved” in the D.C. hotel’s business. Moreover, shortly after the election, the Hotel hosted a promotional event aimed specifically at foreign diplomats and attended by almost 100 diplomats from Brazil to Turkey. Since then, there have been numerous reports of private companies and foreign governments paying for rooms and events there, and several lawsuits have been filed against the President for payments from foreign states. Some illustrative examples include:

  • Bahrain: Shortly after President Trump’s election, the Embassy of Bahrain booked a reception at the Trump International Hotel in Washington, D.C., held on December 7, 2016.
  • Saudi Arabia: On January 23-26, 2017, a lobbying firm working on behalf of Saudi Arabia booked rooms at the hotel, which were paid for by the Saudi government. In fact, the firm has paid nearly $270,000 to the hotel, including $190,272 on lodging, $78,204 on catering, and $1,568 on parking.
  • Kuwait: The Embassy of Kuwait’s celebration of Kuwaiti independence on February 25, 2017 was originally scheduled to take place at the Four Seasons hotel, but was moved to the Trump hotel. According to anonymous sources, the location changed because members of the Trump Organization pressured the Kuwaiti ambassador to move the event. The ambassador, however, has denied these reports. If the allegation is true, it suggests direct efforts by the Trump Organization to leverage the president’s position to steer foreign government business to the Trump hotel. (Nonetheless, the Embassy returned to host its National Day celebration at the Trump Hotel for the second year in a row on February 26, 2018.)
  • Turkey: The American Turkish Council and the Turkey-U.S. Business Council (TAIK)—an arm of the Turkish government—held their annual conference in May 2017 at the Trump hotel. Previous conferences have cost around $400,000, with about one-third of that going to the venue. (Also of note: TAIK is headed by Ekim Alptekin, who founded Inovo BV, the consulting company that paid former national security advisor Michael Flynn $530,000 for lobbying work.)
  • Malaysia: On September 11, 2017, Malaysian Prime Minister Najib Razak visited the Trump International Hotel prior to a meeting with the President at the White House the following day. While Hotel staffers and Malaysian officials declined to say whether the Prime Minister and other officials stayed at the hotel, the visit brought at least 24 hours of activity and sales to the hotel. For instance, a dozen members of the Prime Minister’s entourage could be seen relaxing in a lounge area reserved for hotel guests during lunchtime. Further, the Prime Minister was seen leaving the hotel for dinner and returning later that night. Based on confirmed spending totals of other groups that have made base at the hotel, events of this scale usually result in hundreds of thousands of dollars in revenue for the Trump Organization.

Events at Other Trump Properties: Similar concerns have been raised with respect to other Trump properties, where domestic or foreign interests may seek to curry favor with the president by booking space for events. For example, The National Confectioners Association, which represents large candy companies, is hosting several large meetings at the Trump National Doral Resort and other Trump properties. While these bookings were also made before President Trump was elected, it is nonetheless the case that a lobbying group is paying the Trump Organization while it is also advocating for changes in government policy. And in Canada, shortly after Trump’s election, the American Chamber of Commerce in Canada moved a planned meeting from the home of a diplomatic official to the newly-opened Trump International Hotel & Tower in Vancouver. The Chamber only paid $1,900 to rent the space for the event and asserted that the a decision to move the event was due to a water leak at the original site, rather than any desire to influence the Trump Administration. While the explanation is plausible, events like this nonetheless contribute at least to the perception of an attempt to curry favor. Similarly, GEO Group—the country’s biggest private prison company— held its annual leadership conference at Trump National Doral in Miami. The company has had billions of dollars of contracts (including the Trump Administration’s first contract for an immigration detention center) with the government and donated hundreds of thousands of dollars to the Trump campaign. In 2017 alone, over 60 trade groups, companies, foreign governments, interest groups, and political candidates stayed or hosted events at Trump properties, and Trump properties in 2017. (Before Donald Trump got involved in politics, the annual spending by these groups at Trump properties did not exceed $100,000 in any year since at least 2002.)

Renting and Purchasing Trump Properties:Dozens of companies pay more than $175 million annually to the Trump Organization for rent in Trump buildings. These include companies that lobby the federal government such as JPMorgan Chase Bank, Duane Reade, and Nike; known foreign governments such as the Bank of India and Industrial & Commercial Bank of China; and organizations under federal investigation such as Verizon, Wells Fargo, and Morgan Stanley. Each of these companies or foreign governments pays money directly to the Trump Organization in the form of rent. For example, the Bank of China, which is owned largely by the Chinese government and remains the largest commercial tenant in Trump Tower, pays $1,900,000 in rent and will likely be renegotiating its lease with the Trump Organization over the coming years. And in February 2017, Chen Xiaoyan (who also goes by Angela Chen), the founder and managing director of a consulting and lobbying firm that helps clients secure access to senior public and private decision-makers in the People’s Republic of China, purchased a penthouse apartment in Trump Tower in New York for $15.8 million.

Trump Development Projects Abroad:The Trump Organization has numerous hotel, resort, and other projects in a wide range of countries, and the profitability of these projects are often affected by local government policy. There is therefore a concern that these governments legal and regulatory treatment of Trump-affiliated projects may be influenced by a desire to curry favor with the Trump Organization, or that such favorable treatment (or the implicit threat of unfavorable treatment) might influence U.S. policy toward these countries. Some examples of this concern include:

  • Indonesia: The Trump Organization is currently developing a luxury resort on the Indonesian island of Bali. The Bali local government provided public land for the project, granted numerous licenses and permits, and is planning to build (at government expense) a toll road extension that will substantially shorten the drive from the airport to the Trump resort–a decision that has raised concerns that the government may be deliberately undertaking an infrastructure project to curry favor with the U.S. president.
  • India: In February 2018, Donald Trump Jr. made a week-long visit to India to sell the Trump Organization’s luxury high-rise condos. India is the largest market for the Trump Organization, with five projects including residential towers in Pune, Mumbai, Gurgaon, and Kolkata. During this trip, promotions stated: “Book your Trump Towers’ residence before Feb. 22 and join Mr. Donald Trump Jr. for a ‘conversation and dinner’.” $15 million of real estate in the towers in Gurgaon was sold on the day that this offer appeared in the newspapers. On February 23, Trump Jr. also spoke at a business-leaders’ summit in New Delhi. Although he asserted that he was speaking as a businessman, not a representative of his father’s administration, others who attended the summit did not understand his remarks that way. According to P. V. Sunil, a managing director of a company that builds malls and cinema complexes, “[t]hough he claims that it’s not an official speech, we take it as an official statement… He speaks to his father more than anyone here.”
  • Panama: The Trump Organization developed a luxury hotel in Panama City, and the Panamanian government has stepped in to aid the project in various ways, including government-funded repair of privately-owned sewage and drainage systems, use of the hotel for various government functions, and favorable permitting and tax decisions–decisions that, while not illegal or necessarily improper, raise significant concerns about conflicts of interest. (There’s been some more recent drama at this property, as the building’s majority owner, Orestes Fintiklis, tried to fire the Trump Organization for mismanaging the hotel’s finances, but the Trump Organization refused to leave, instigating a standoff in which the police were called; the Panamanian government is currently investigating whether  there was “punishable conduct” by the Trump Organization.)
  • Turkey: The Turkish conglomerate Dogan Holding was instrumental in developing the Trump Towers Istanbul, and continues to pay millions to the Trump Organization. The Erdogan government, however, has previously imposed a $2.5 billion tax fine on Dogan Holding, and could put further pressure on the company in the future. According to some reports, this is a deliberate strategy to pressure the Trump Administration. According to a Newsweek report, President Erdogan “told associates he believes he must keep pressure on Trump’s business partner [in Turkey] to essentially blackmail the president.”
  • United Arab Emirates: DAMAC Properties, a partner of the Trump Organization at its Trump World Golf Club Dubai, awarded the Middle East Subsidiary of China State Construction Engineering Corporation a $32 million contract to build a six-lane road as part of the residential piece of the golf club project called Akoya Oxygen. The companies’ news releases do not detail the exact timing of the contract, except to note that it was sometime in the first two months of 2017, which is around the time President Trump was inaugurated. The Trump Organization has said that the residential project and golf course are “totally unrelated,” despite marketing materials showing them to be intertwined.
  • Taiwan: On December 2, 2016, President Trump broke with nearly four decades of presidential precedent and communicated with the President of Taiwan, Tsai Ing-wen. (Since 1979, the United States has not officially recognised Taiwan) In the days after the call, news broke that the Trump Organization was considering expanding to Taiwan. While the Trump Organization denied any such plans, the Mayor of Taoyuan—the city where the Organization supposedly wants to build— confirmed a September 8, 2016 visit from a representative of the Trump Organization to talk about expansion.
  • Chinese Trademarks: Although President Trump’s phone call with the President of Taiwan caused tension in the U.S.-China relationship, in February 2017 President Trump reaffirmed the U.S. commitment to the so-called “One China Policy.” Within a week of this announcement, the Chinese government granted the Trump Organization long-coveted Chinese trademarks for the “Trump” brand. As of June 2017, the New York Times reported that President Trump had  123 trademarks registered and provisionally approved (meaning they will be approved within three months if there are no objections) in China. While there is no direct evidence of a quid pro quo, and some commentators have suggested alternative explanations for the Chinese government’s decision, a number of factors—the suspicious timing, the unusual speed with which the trademarks were granted, and the mere fact that a foreign government conferred on the President’s business a benefit worth millions of dollars—together raise serious concerns. Similarly, Ivanka Trump’s company has over 40 trademark applications pending in China. On April 6, Ms. Trump—who remains an important adviser to her father on China related issues—dined with Chinese President Xi Jinping at Mar-a-Lago.  That same day China granted her company three provisional trademarks (which had been filed with the authorities before President Trump was elected president).

Membership in Trump Golf Clubs: Among the members of Trump golf clubs (who pay initiation fees that can exceed $100,000), there are at least 50 executives whose companies hold federal contracts, and 21 lobbyists and trade group officials. While many of these memberships may pre-date Trump’s election, it nonetheless remains the case that individuals with a vested influence in influencing U.S. government are paying substantial sums to businesses controlled by the President’s family, and from which the President directly benefits. Indeed, according to media reports, club members use the access to President that membership affords in order to “influence the President on policy[.]”

Guo Wengui Deportation: The Chinese government urged President Trump to return Guo Wengui, a Chinese billionaire who fled China and has an application for asylum pending in the United States. Chinese officials accuse Guo of crimes including bribery, kidnapping, and rape. In October 2017, after receiving a request from the Chinese Government hand-delivered by casino tycoon Steve Wynn (who himself depends on Chinese government approvals to operate his lucrative casinos in Macau), President Trump initially agreed that “[w]e need to get this criminal out of the country.” However, the President changed his mind after his aides informed him that Guo was a member of Mar-a-Lago. Setting aside a discussion of whether the United States should comply with China’s request, it is troubling that the President seems to be making decisions that have significant implications for the diplomatic relationship between the United States and China based at least in part on a personal profit motive.

Real Estate Sales to Secretive Buyers: In the first major divestiture of a Trump property since the election, the Trump Organization is selling Le Chateau des Palmiers — a five acre beachfront estate on the Caribbean island of St. Martin. President Trump bought the property in 2013 for an undisclosed amount, although the asking price at the time was $19.7 million. The property was initially listed for $28 million, although the price is officially listed as “price on application.” Given that any transaction would be a private property transaction, the Trump Organization would not need to reveal the identity of the buyer. This raises concerns that a buyer could overpay to curry favor with the Trump Administration and the President. (In August 2017, though, the asking price was reduced to $16.9 million.) More generally, in 2017, Trump Organization companies sold more than $35 million in real estate, to mostly secretive shell companies that obscure the identities of the buyers. President Trump’s real estate companies began adopting this trend of obscuring the identities of buyers around the time he won the Republican nomination. Two years before the nomination, only 4% of buyers of Trump real estate used this tactic; a year after the nomination, the number percentage of Trump real estate purchasers who hid their identity through anonymous shell companies was up to about 70%, a number that has held steady through President Trump’s first year in office.

Jared Kushner’s Debts, Financial Dealings, and Foreign Contacts: As discussed above, Jared Kushner serves as a senior advisor to President Trump, and although Kushner has formally resigned his role as CEO of Kushner Companies, he has not completely divested. (He sold most of his ownership stake in the company to his family members, a move which many ethics experts considered inadequate.) Over the past year, Mr. Kushner’s debts have grown substantially, and these debts directly implicate Mr. Kushner’s role in government and create a potential national security risk. In fact, officials in the United Arab Emirates, China, Israel, and Mexico have already discussed how to manipulate Mr. Kushner because of “his complex business arrangements, financial difficulties and lack of foreign policy experience.” These risk are so pressing that White House Chief of Staff John Kelly downgraded Kushner’s security clearance and Mr. Kushner is being investigated by Special Counsel Mueller for several international contacts he had related to his debt. Mr. Kushner’s debts and complex financial arrangement compromise his role in a plethora of ways. A few concrete examples of this include:

  • Kushner’s Failed Transaction with the Chinese: In March 2017, news outlets reported that a Chinese company, Anbang Insurance Group, planned a $4 billion transaction involving a property at 666 5th Avenue in Manhattan owned by Kushner Companies, and which is deeply in debt. If the deal had gone through, it would have netted the Kushner family firm approximately $400 million. However, within a few weeks of the initial reports, Anbang and the Kushner family ended talks about a possible deal. It is not clear how much public outcry over the potential conflict of interest issue may have played a role. (Since then, the Chinese Government has taken control of Anbang and are prosecuting the Group’s chairman for financial offenses.)
  • Kushner’s Failed Loan from Qatar: In 2015 and 2016, Jared Kushner negotiated with Qatari billionaire and former prime minister Hamad bin Jassim al-Thani (HBJ for short) regarding a possible $500 million investment in Mr. Kushner’s troubled property at 666 Fifth Avenue in New York City. However, HBJ pulled out when Mr. Kushner was unable to secure additional funding from Anbang in March 2017 (discussed above). In June 2017, President Trump sided against Qatar in the country’s diplomatic standoff with Saudi Arabia, the UAE, Egypt, and Bahrain, citing concerns about Qatar’s funding of terrorism. Since June, Qatar has been under blockade by its neighbors. President Trump’s statements about Qatar contradicted those of Secretary of State Rex Tillerson, who had called for an end to the embargo. The timing of the failed business deal between HBJ and Mr. Kushner has led some to speculate that President Trump’s stance toward Qatar is revenge, or perhaps an attempt to send a message of intimidation to other prospective foreign business partners. This speculation is fueled in part by the fact that, according to anonymous sources, Secretary Tillerson believed that the U.S. position on Qatar was being driven primarily by Kushner. (These interactions between Mr. Kushner and HBJ are also being investigated by Special Counsel Robert Mueller.)
  • Kushner’s Meeting with Russian Officials: In connection with the ongoing investigation into possible collusion between the Trump campaign and the Russian government during the 2016 election, the FBI and Special Counsel Robert Mueller are reportedly scrutinizing meetings in 2016 between Jared Kushner and two Russian officials, Ambassador Sergey Kislyak and Sergey Gorkov, the head of VEB (a Russian state-owned development bank) and a close associate of Vladamir Putin. The contents of those discussions are still unknown, and the parties have issued seemingly contradictory explanations. (Mr. Kushner, for example, asserted that he was discussing policy issues, while Mr. Gorkov asserted that in their meeting Mr. Kushner was acting in his private capacity as a representative of his business.) Some media reports have suggested that Mr. Kushner and Mr. Gorkov may have discussed the possibility that Mr. Gorkov’s bank might extend financing to the 666 Fifth Avenue property mentioned above, or other business ventures of the Kushner family, if the Trump Administration lifted the sanctions that the U.S. had imposed on Russia in response to Russia’s incursion into Ukraine. (Others, however, have questioned the plausibility of this speculation, given that the size of the loan required for the 666 Fifth Avenue property would be quite large relative to VEB’s assets.)
  • Kushner’s Financial Ties with Israel: Shortly before Kushner accompanied the President on his first diplomatic trip to Israel, the Kushner family real estate company received a $30 million investment from one of Israel’s largest financial institutions, Menora Mivtachim. This transaction helped increase new equity into ten Maryland apartment complexes controlled by Mr. Kushner’s family firm, in which he still has a stake. While these business deals do not appear to violate federal ethics laws, they raise concerns about whether Kushner Companies’ financial ties with Israeli financial firms could influence his diplomatic role in the region, or further undermine the perception of the United States as an independent “honest broker” in the Middle East.
  • Kushner Family Influence-Peddling in China: At a May 2017 investor event in Beijing, Nicole Kushner Meyer—Jared Kushner’s sister—made a pitch soliciting $150 million for a Jersey City housing development at One Journal Square to over 100 Chinese investors. The pitch attracted criticism for two reasons. First, Ms. Meyer promoted the EB-5 visa, a program that allows a path to permanent residence for foreign investors who invest more than $500,000 in projects that create jobs in the US. (The brochure for the event included slogans such as, “Invest $500,000 and immigrate to the United States.”) The EB-5 program long pre-dates President Trump’s election and has been supported by both Democrat and Republican officials in the past; while the program has been persuasively criticized, Ms. Meyer’s remarks do not necessarily raise specific concerns about leveraging the political influence into private gain. Second, however, Ms. Meyer’s remarks attracted additional criticism because she also stressed that the investment project “means a lot to me and my entire family,” and she made a point to highlight the important role of her brother in the White House. Indeed, Mr. Kushner previously oversaw the project until he left the company to be senior advisor to the President, and he remains the beneficiary of trusts that own his stakes in Kushner Companies. After the criticism, the Kushner Companies apologized “if that mention of [Jared Kushner] was in any way interpreted as an attempt to lure investors.” Apology notwithstanding, evidence of the use of Jared Kushner’s government connections to attract investment from China surfaced again in July 2017. Two companies, Qiaowai and the US Immigration Fund, which were working with Kushner Companies to find Chinese investors, used Mr. Kushner’s role as a selling point in promotions posted on social media service WeChat. The Qiaowai ad made a direct reference to the Kushner family’s promotion of the EB-5 visa program, explaining that the development was approved for EB-5 visas and that the tight relationship between Kushner Companies and Mr. Trump means that “in the Trump era, the EB-5 program is likely to receive support and be expanded.” The US Immigration Fund ad, aside from referring to Mr. Kushner as “the celebrity of the family” and “30-something Mr. Perfect” linked to a December 2016 Forbes cover emblazoned with a photo of him and the headline, “This guy got Trump elected.” After CNN reached out to Qiaowai and the US Immigration Fund, they took down their ads. Kushner Companies claimed that it was unaware of the promotions. Nonetheless, the Securities & Exchange Commission and the Brooklyn U.S. Attorney’s Office have opened an investigation into whether Kushner Companies had violated the laws in its promotion of the visa program to Chinese investors.

State Public Pension Funds: Public pension funds in California, New York, Texas, Arizona, Montana, Michigan, and Missouri—with more than five million members— have millions of dollars invested in The CIM Group, a Los Angeles-based investment group that owns The Trump SoHo Hotel and Condominium. The CIM Group pays Trump International Hotels Management LLC 5.75% of Trump SoHo’s operating budget, resulting in millions of dollars in payments. Thus, these state pensions are paying millions of dollars almost directly to the Trump Organization through the CIM Group. That arrangement will soon change, however, as CIM and the Trump Organization have agreed to end the Trump Organization’s role in managing the Trump Soho by the end of this year. (The deal comes on the heels of a ProPublica report that Manhattan D.A. Cyrus Vance dropped felony fraud charges against Jared Kushner and Ivanka Trump for misleading buyers about the percentage of condos that had already been sold at the Trump Soho after Trump attorney Marc Kasowitz made a donation to Vance’s 2012 re-election campaign.)

Mississippi Hotel Tax Breaks: In June 2917, the Trump Organization announced a new mid-priced hotel chain, Scion hotel, and the first of these hotels was recently granted a tax break worth over $6 million from the Mississippi Development Authority. The hotel, The Scion at West End, will be located in Cleveland, Mississippi and built by Chawla Pointe LLC. The tax rebate, provided through the Mississippi Development Authority’s Tourism Tax Rebate program will subsidize an estimated third of the project, which is projected to cost $20 million. While the CEO of Chawla Pointe LLC emphasizes that the Trump Organization played no role in the rebate application, the break directly profits the Trump Organization at the expense of Mississippi taxpayers.


This blog was originally published on GAB | The Global Anticorruption Blog Law, Social Science, and Policy

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