Trump Profited From Money Laundering Operation Linked To Iranian Military Unit
A licensing deal struck by the Trump Organization on a luxury hotel project in Baku, Azerbaijan, in 2012 involved players with seedy ties to the Azerbaijani government and the Iranian Revolutionary Guard Corps, according to The New Yorker.
The publication reported in 2017 that the Trump International Hotel & Tower Baku never opened, with the president’s company abandoning the project in 2016, but the deal ticked numerous boxes when it came to potential for corruption.
For starters, the “Azerbaijanis behind the project were close relatives of Ziya Mammadov, the Transportation Minister and one of the country’s wealthiest and most powerful oligarchs,” the New Yorker noted.
And the location of the property — a rundown and crowded low-income area of Baku, quite far from the city’s seaside promenade — made nearly no sense to establish a luxury hotel.
In addition to the Mammadov family, other ties to the project should have raised red flags for the Trump organization — namely the Mammadovs’ ties to the Iranian Revolutionary Guard Corps.
The Trump Organization’s chief legal officer, Alan Garten, said the company did its due diligence in running a risk assessment on the project, which checks for potential corruption that would put the kibosh on such a project, but found nothing of concern.
This is interesting, given that Azerbaijan is a notoriously corrupt country.
Garten said the company did not know of Mammadov connection to Keyumars Darvishi — the Iranian linked to the Iranian Revolutionary Guard Corps — until 2015, when it learned that “certain principals associated with the developer may have had some association with some problematic entities.”
Still, the Trump Organization did not sever ties to the project until the following year, in 2016.
Garten told the New Yorker that the Trump Organization is still unsure whether the link between the two families is legit or if it is merely an allegation “spread by the media.”
But Allison Melia, formerly a lead analyst of Iran’s economy for the CIA, told the publication that “any reputable investigative firm conducting a risk assessment would have advised a U.S. company to avoid a deal with a family connected to the Revolutionary Guard.”
The New Yorker’s investigation into the Trump Organization’s Baku project raised legal questions, particularly the possibility that the company violated the 1977 Foreign Corrupt Practices Act.
Under this law, American companies are forbade “from participating in a scheme to reward a foreign government official in exchange for material benefit or preferential treatment” — and it is a crime even if the company did not know of corruption but could have easily uncovered it.
Alexandra Wrage, who runs Trace International, told The New Yorker "that a U.S. company looking to make a deal with a foreign partner should be confident that the partner has a reasonable likelihood of making a profit from the venture. If the project seems almost guaranteed to lose money, it could well be a bribery scheme or some other criminal operation."
The location of Trump Tower Baku alone was questionable at best.
Garten said he believed the company stood on firm legal ground, because it was merely a licensing deal, and the Trump Organization was not the developer.
Even here, however, the company went further than licensing deal typically take an organization, regularly sending Trump Organization staff to the site in Baku and Ivanka Trump, the company’s lead on the project, having a hand in virtually every little detail.
Regardless, Garten told the New Yorker, “We had no equity. We didn’t control the project. The flow of funds is in the wrong direction. We did not pay any money to anyone. Therefore, it could not be a violation of the F.C.P.A.”
Jessica Tillipman, an assistant dean at George Washington University Law School, disagreed.
“No, that’s just wrong,” she said. “You can’t go into business deals in Azerbaijan assuming that you are immune from the F.C.P.A.”
She added, “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.”
Tillipman was not alone in her position:
More than a dozen lawyers with experience in F.C.P.A. prosecution expressed surprise at the Trump Organization’s seemingly lax approach to vetting its foreign partners. But, when I asked a former Trump Organization executive if the Baku deal had seemed unusual, he laughed. “No deal there seems unusual, as long as a check is attached,” he said.
Though it is unclear exactly how much the president made from the Baku deal, Trump's limited public filings reveal he received $2.8 million. Further, "the Trump Organization shared documents that showed an additional payment of two and a half million dollars, in 2012, but declined to disclose any other payments."