What Secrets Is Mueller Finding As He Investigates Trump's Shady Foreign Deals?-- Part I

-by Valley Girl



As I told Howie, I went to the New Yorker site looking for (cat) cartoons. But I never got that far, because almost immediately I discovered some fascinating investigative articles written by Adam Davidson. Two are worthy of particular note, given Robert Mueller’s brief to investigate the business dealings of Donald Trump. The first, published on March 13, 2017, is titled Donald Trump's Worst Deal. The subtitle is “The President helped build a hotel in Azerbaijan that appears to be a corrupt operation engineered by oligarchs tied to Iran’s Revolutionary Guard.” I’ll summarize that here. The second will appear in a separate post here at DWT later this evening... Yes, probably your first ever whole night in the Caucuses.

Howie has traveled to Azerbaijan, and seen the Trump Tower in Baku up close and personal. He’s written about this at DWT; here are some of his posts about Baku's rampant corruption and the Trump family.

Some background about Azerbaijan- from wiki:

The Azerbaijan Democratic Republic proclaimed its independence in 1918 and became the first democratic state in the Muslim-oriented world. The country was incorporated into the Soviet Union in 1920 as the Azerbaijan Soviet Socialist Republic. The modern Republic of Azerbaijan proclaimed its independence on 30 August 1991, prior to the official dissolution of the USSR in December 1991.

In summarizing Davidson’s ~7000 word article, I pared it down to the essence, but didn’t change his (very careful) wording. Note these when reading: The Foreign Corrupt Practices Act, Iranian Revolutionary Guard, Mammadov family’s corruption, The Corleones of the Caspian.

And, before or after you read the summary, watch: This CNN video interview is excellent, but not embeddable, alas: The New Yorker's Adam Davidson speaks to Christiane Amanpour about his piece on Donald Trump's business with oligarchs tied to Iran's Revolutionary Guard. It’s a "must watch," and the information jumps out at you in a way that it just doesn’t on the written page.

The Trump Tower Baku never opened. Trump partnered with an Azerbaijani family that U.S. officials called notoriously unethical.

Heydar Aliyev Prospekti, a broad avenue in Baku, the capital of Azerbaijan, connects the airport to the city. The road is meant to highlight Baku’s recent modernization, and it is lined with sleek new buildings.

As you approach the city center, a tower at the end of the avenue looms in front of you. The building, a five-star hotel and residence called the Trump International Hotel & Tower Baku, has never opened, though from the road it looks ready to welcome the public.

The more time I spent in the neighborhood, the more I wondered how the hotel could have been imagined as a viable business. The development was conceived, in 2008, as a high-end apartment building. In 2012, after Donald Trump’s company, the Trump Organization, signed multiple contracts with the Azerbaijani developers behind the project, plans were made to transform the tower into an “ultra-luxury property.” According to a Trump Organization press release, a hotel with “expansive guest rooms” would occupy the first thirteen floors; higher stories would feature residences with “spectacular views of the city and Caspian Sea.” For an expensive hotel, 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, on the west side of the city. 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: at the AYF Palace, most rooms are forty-two dollars a night. There are no upscale restaurants or shops. Any guests of the Trump Tower Baku would likely feel marooned.

The timing of the project was also curious. By 2014, when the Trump Organization publicly announced that it was helping to turn the tower into a hotel, a construction boom in Baku had ended, and the occupancy rate for luxury hotels in the city hovered around thirty-five per cent.

A former top official in Azerbaijan’s Ministry of Tourism says that, when he learned of the Trump hotel project, he asked himself, “Why would someone put a luxury hotel there? Nobody who can afford to stay there would want to be in that neighborhood.”

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. According to the Transparency International Corruption Perceptions Index, Azerbaijan is among the most corrupt nations in the world.

After Donald Trump became a candidate for President, in 2015, (several) publications … raised questions about his involvement in the Baku project... a U.S. diplomat described Ziya Mammadov as “notoriously corrupt even for Azerbaijan.” The Trump Organization’s chief legal officer, Alan Garten, told reporters that the Baku hotel project raised no ethical issues for Donald Trump, because his company had never engaged directly with Mammadov.

A month after Trump was elected President, Garten announced that the Trump Organization had severed its ties with the hotel project, describing the decision to CNN as little more than “housecleaning.” I was in Baku at the time, and it had become clear that the Trump Organization’s story of the hotel was incomplete and inaccurate.

Ivanka in Baku

An Azerbaijani lawyer who worked on the project revealed to me that the Trump Organization had not just licensed the family name; it also had signed a technical-services agreement in which it promised to help its partner meet Trump design standards. Technical-services agreements are often nominal addenda to licensing deals... The Azerbaijani lawyer told me, “We were always following their instructions. We were in constant contact with the Trump Organization. They approved the smallest details.”

Ivanka Trump was the most senior Trump Organization official on the Baku project. In October, 2014, she visited the city to tour the site and offer advice... The Azerbaijani lawyer said, “Ivanka personally approved everything.”

The sustained back-and-forth between the Trump Organization and the Mammadovs has legal significance... Tom Fox, a Houston lawyer who specializes in anti-corruption compliance, said, “It’s a problem if you’re making a profit off of someone else’s corrupt conduct.”

Before signing a deal with a foreign partner, American companies, including major hotel chains, conduct risk assessments and background checks that take a close look at the country, the prospective partner, and the people involved... A senior executive at one of the largest American hotel chains, who asked for anonymity because he feared reprisal from the Trump Administration, said, “We wouldn’t look at due diligence as a burden. There certainly is a cost to doing it, especially in higher-risk places. But it’s as much an investment in the protection of that brand. It’s money well spent.”

Alan Garten told me that the Trump Organization had commissioned a risk assessment for the Baku deal, but declined to name the company that had performed it. …according to Garten, the Trump Organization had undertaken “extensive due diligence” before making the hotel deal and had not discovered “any red flags.”

But the Mammadov family, in addition to its reputation for corruption, has a troubling connection that any proper risk assessment should have unearthed: for years, it has been financially entangled with an Iranian family tied to the Iranian Revolutionary Guard Corps, the ideologically driven military force.

I asked Garten how deeply the Trump Organization had looked into the Mammadov family’s political connections. …When I asked him to provide documentation of due diligence, he said that he couldn’t share it with me, because “it’s confidential and privileged.”

(But) the Trump Organization may have broken the law in its work with the Mammadov family. The Foreign Corrupt Practices Act, passed in 1977, forbade American companies from participating in a scheme to reward a foreign government official in exchange for material benefit or preferential treatment. The law even made it a crime for an American company to unknowingly benefit from a partner’s corruption if it could have discovered illicit activity but avoided doing so. This closed what was known as the “head in the sand” loophole.

Even a cursory look at the Mammadovs suggests that they are not ideal partners for an American business. Four years before the Trump Organization announced the Baku deal, WikiLeaks released the U.S. diplomatic cables indicating that the family was corrupt; one cable mentioned the Mammadovs’ link to Iran’s Revolutionary Guard. In 2013, Radio Free Europe/Radio Liberty and the Organized Crime and Corruption Reporting Project investigated the Mammadov family’s corruption and published well-documented exposés. Six months before the hotel announcement, Foreign Policy ran an article titled “The Corleones of the Caspian,” which suggested that the Mammadovs had exploited Ziya’s position as Transportation Minister to make their fortunes.

Alan Garten, the Trump Organization lawyer, did not deny that there was corruption involved in the project. “I’m not going to sit here and defend the Mammadovs,” he 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. The flow of funds is in the wrong direction.” He added, “We did not pay any money to anyone. Therefore, it could not be a violation of the F.C.P.A.”

“No, that’s just wrong,” Jessica Tillipman, an assistant dean at George Washington University Law School, who specializes in the F.C.P.A., 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 explained that the F.C.P.A. defines corruption as “the payment of money or anything of value” to a foreign official... Tillipman, along with several other F.C.P.A. experts, told me that the Trump Organization had clearly provided things of value in the Baku deal: its famous brand, its command of the luxury market, its extensive technical advice.

American companies 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 than 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.

To this day, the Trump Organization has not provided satisfying answers to the most basic questions about the Baku deal: (including) whether the Mammadovs used their political power to benefit themselves and the Trump Organization; and whether the Mammadovs used money obtained from the Iranian Revolutionary Guard to fund the Trump Tower Baku.

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.

Next up: we head east to another sleazy Trump project steeped in corruption, money-laundering and a country's shadiest characters-- Señor Trumpanzee tries his luck in Batumi.