Trump Profited From Money Laundering Operation Linked To Iranian Military Unit

JakeThomas

The Trump Organization's now-defunct project in Baku, Azerbaijan, was rife with corrupt players.

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 — an 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.”

In 2008, the year that the tower was announced, Ziya Mammadov, in his role as Transportation Minister, awarded a series of multimillion-dollar contracts to Azarpassillo, an Iranian construction company. Keyumars Darvishi, its chairman, fought in the Iran-Iraq War.

After the war, he became the head of Raman, an Iranian construction firm that is controlled by the Revolutionary Guard. The U.S. government has regularly accused the Guard of criminal activity, including drug trafficking, sponsoring terrorism abroad, and money laundering.

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.

The New Yorker reported that a number of contractors who worked on the building "described behavior that seemed nakedly corrupt."

Frank McDonald, an Englishman who has had a long career doing construction jobs in developing countries, performed extensive work on the building’s interior. He told me that his firm was always paid in cash, and that he witnessed other contractors being paid in the same way. At the offices of Anar Mammadov’s company, he said, “they would give us a giant pile of cash,” adding, “I got a hundred and eighty thousand dollars one time, which I fit into my laptop bag, and two hundred thousand dollars another time.” Once, a colleague of his picked up a payment of two million dollars. “He needed to bring a big duffelbag,” McDonald recalled. The Azerbaijani lawyer confirmed that some contractors on the Baku tower were paid in cash.

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.

It’s not clear how much money Trump made from the licensing agreement, although in his limited public filings he has reported receiving $2.8 million. (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.) Trump also had signed a contract to manage the hotel once it opened, for an undisclosed fee tied to the hotel’s performance.

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.”

Even here, however, the company went further than licensing deals 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.

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