Tuesday, March 07, 2017

Trump's Worst Money-Laundering Deal

The corruption of Der Trumpenführer seems to know few limits.  While he was releasing a new executive order targeting Muslims, a lengthy story in the New Yorker reviews how a Trump deal in Azerbaijan (yes, most Trump voters have no idea where that is) appears to have been structured to either bribe governmental officials and/r launder money for oligarchs tied to Iran’s Revolutionary Guard.  On the one hand, Trump targets travelers from Iran even as Trump laundered money to benefit Iran's Revolutionary Guard.  The take away?  Money is the only thing to which Trump - and most likely his children as well - has any true allegiance.  If his supporters think he gives a rat's ass about them, they are even more delusional than I thought.  If Trump will do this in business deals, what will he do welding the power of the presidency.  Here are article highlights:
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.
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 Perception Index, Azerbaijan is among the most corrupt nations in the world. . . . Ziya Mammadov became the Transportation Minister in 2002, around the time that the regime began receiving enormous profits from government-owned oil reserves in the Caspian Sea. At the time of the hotel deal, Mammadov, a career government official, had a salary of about twelve thousand dollars, but he was a billionaire.
The Trump Tower Baku originally had a construction budget of a hundred and ninety-five million dollars, but it went through multiple revisions, and the cost ended up being much higher.
After Donald Trump became a candidate for President, in 2015, Mother Jones, the Associated Press, the Washington Post, and other publications ran articles that raised questions about his involvement in the Baku project. These reports cited a series of cables sent from the U.S. Embassy in Azerbaijan in 2009 and 2010, which were made public by WikiLeaks. In one of the cables, 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. Trump’s company had made the deal not just with Anar Mammadov but also with Ziya’s brother Elton—an influential member of the Azerbaijani parliament. Elton signed the contracts, and in an interview he confirmed that he founded Baku XXI Century, the company that owns the Trump Tower Baku. When he was asked who owns Baku XXI Century, he called it a “commercial secret” but added that he “controlled all its operations” until 2015, when he cut ties to the company.
The sustained back-and-forth between the Trump Organization and the Mammadovs has legal significance. If parties involved in the Trump Tower Baku project participated in any illegal financial conduct, and if the Trump Organization exerted a degree of control over the project, the company could be vulnerable to criminal prosecution. 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.” Moreover, recent case law has established that licensors take on a greater legal burden when they assume roles normally reserved for developers. The Trump Organization’s unusually deep engagement with Baku XXI Century suggests that it had the opportunity and the responsibility to monitor it for corruption.
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. 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.
No evidence has surfaced showing that Donald Trump, or any of his employees involved in the Baku deal, actively participated in bribery, money laundering, or other illegal behavior. 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.
After 9/11, prosecuting financial corruption acquired new political importance. The C.I.A. and other intelligence services came to believe that preventing illicit money from flowing through the global financial system was a necessary tactic in preventing future terrorist attacks, and the U.S. led an international effort to enforce financial transparency. Banks and other financial entities were required to vet their clients aggressively and to report any suspicious activity. Prosecutions for money laundering, bribery, and other financial crimes rose significantly. In 2000, the government launched three prosecutions under the F.C.P.A. Last year, it initiated fifty-four.
As the Mammadovs were preparing to build the tower, the family patriarch, Ziya, was cementing his financial relationship with the Darvishis, the Iranian family with ties to the country’s Revolutionary Guard.
At least three Darvishis—the brothers Habil, Kamal, and Keyumars—appear to be associates of the Guard. In Farsi press accounts, Habil, who runs the Tehran Metro Company, is referred to as a sardar, a term for a senior officer in the Revolutionary Guard.
Iran has two militaries. The Iranian Army is a conventional force whose mission is to protect the country. The Revolutionary Guard is an independent force of about a hundred and fifty thousand soldiers, whose duty is to protect the country’s Islamic system and to preserve the power of the Supreme Leader, Ayatollah Ali Khamenei. The Revolutionary Guard has its own air force and navy, and it has a unit known as the Quds Force, which the United States has identified as a major supporter of Hezbollah and other international terrorist groups. The Guard has developed a shadow economy within Iran to fund its activities and expand its power.
The available evidence strongly suggests that Ziya Mammadov conspired with an agent of the Revolutionary Guard to make overpriced deals that would enrich them both while allowing them to flout prohibitions against money laundering and to circumvent sanctions against Iran. Based on Ziya Mammadov’s past, it seems reasonable to assume that his main motive was profit. Like most Azerbaijanis, he is a secular Shiite Muslim, and he has no known ties to hard-line factions in Iran. Why did the Darvishis want to work with the Mammadovs? It might have caught their attention that the Mammadovs had their own private bank— one that had unfettered access to the global financial system.
Money launderers love construction projects. They attract legitimate funds from governments and private investors, and they require frequent payouts to legitimate subcontractors: cement factories, lumberyards, glass manufacturers, craftsmen. In the Trump Tower Baku project, money was going in and out of the U.S., the United Kingdom, Turkey, Romania, the United Arab Emirates, and several other countries. With such projects, it can be exceedingly difficult to detect the spread of illicit funds.
Throughout the Presidential campaign, Trump was in business with someone that his company knew was likely a partner with the Iranian Revolutionary Guard. In a March, 2016, speech before the American Israel Public Affairs Committee, Trump said that his “No. 1 priority is to dismantle the disastrous deal with Iran.” Calling Iran the “biggest sponsor of terrorism around the world,” he promised, “We will work to dismantle that reach—believe me, believe me.” In the speech, Trump lamented that Iran had been allowed to develop new long-range ballistic missiles. According to Iran Watch, an organization that monitors Iran’s military capabilities, much of the technology to make the missiles was provided by Nasr, the company once run by Kamal Darvishi.
The Baku deal appears to be the second time that the Trump Organization has turned a blind eye to U.S. efforts to sanction Iran. In 1998, when Donald Trump purchased the General Motors Building, in Manhattan, he inherited as a tenant Iran’s Bank Melli. The following year, the Treasury Department listed Bank Melli as an institution that was “owned or controlled” by the government of Iran and that was covered by U.S. sanctions. (The department later labelled Bank Melli one of the primary financial institutions through which Iran was funnelling money to finance terrorism and to develop weapons of mass destruction.) The Trump Organization kept Bank Melli as a tenant for four more years before terminating the lease.
One has to wonder when Trump's cabinet will wake up and (when this illegal conduct is combined with this past weekend's Twitter insanity) invoke the 25th Amendment to remove Trump from office.

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