I By Inti Pacheco, Manuela Andreoni, Alex Mierjeski and Keenan Chen n late 1997, Donald Trump was beginning to bounce back from near nancial ruin. Two years earlier, his nancial losses had totaled $916 million following a string of bankruptcies at Trump casinos and other properties earlier in the decade, according to tax records published in late 2016. But then, Trump stumbled upon a deal that would change the course of his real estate business. In Seoul, South Korea, a proposed tower on the banks of the Han River needed a name to convey luxury to prospective buyers. The project’s developer, the Daewoo Group, wanted to pay Trump for the use of his name, nothing more. Under the arrangement, Trump would receive a branding fee and a percentage of the building’s annual revenue, a strategy that is common among international hospitality brands. Many of the organization’s international partners have faced scandals involving corruption, fraud, money laundering and drug tracking. Here's an in-depth look at the company’s licensing business around the world, focusing on controversial projects in Mexico, Brazil, Dominican Republic and Panama. VIDEO: THIS IS HOW THE TRUMP LICENSING BUSINESS WORKS 00:37 / 05:13 OVERVIEW MEXICO DOMINICAN R. BRAZIL PANAMA ORG: a magnet for dirty businessmen & ESP ENG
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IBy Inti Pacheco, Manuela Andreoni, Alex Mierjeski and Keenan Chen
n late 1997, Donald Trump was beginning to bounce backfrom near �nancial ruin. Two years earlier, his �nanciallosses had totaled $916 million following a string of
bankruptcies at Trump casinos and other properties earlier inthe decade, according to tax records published in late 2016. Butthen, Trump stumbled upon a deal that would change thecourse of his real estate business.
In Seoul, South Korea, a proposed tower on the banks of theHan River needed a name to convey luxury to prospectivebuyers. The project’s developer, the Daewoo Group, wanted topay Trump for the use of his name, nothing more. Under thearrangement, Trump would receive a branding fee and apercentage of the building’s annual revenue, a strategy that iscommon among international hospitality brands.
Many of the organization’s international partners have faced scandalsinvolving corruption, fraud, money laundering and drug tra�cking.Here's an in-depth look at the company’s licensing business around theworld, focusing on controversial projects in Mexico, Brazil, DominicanRepublic and Panama.
VIDEO: THIS IS HOW THE TRUMP LICENSING BUSINESSWORKS
Abraham Wallach, then the Trump Organization’s executivevice president for development and acquisitions, said hetraveled to South Korea with Trump and saw in the project anintriguing formula: pro�t with virtually no investment. "I waslooking at these nice buildings," he recalled in an interviewwith Univision, "and I was saying, ‘Gee, there’s an opportunityhere.’”
The deal helped de�ne a substantial part of the TrumpOrganization’s business strategy over the next two decades,and it launched the Trump brand onto the global stage. Aftersigning the �rst deal with Daewoo in 1999, Trump went on towork with at least 25 different global partners on 27 similarprojects up to now. The Trump Organization has had plans tolend its name to hotels and towers in 17 countries.
According to Wallach, anyone can become a Trump partner, aslong as they’re willing to pay his fee.
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IN THE PAST 20 YEARS, THE REAL ESTATE MOGUL HASSIGNED DEALS WITH DEVELOPERS IN 17 COUNTRIES
Fifteen of these 27 international Trump-branded projectsinclude developers or investors who have faced criminalallegations, an investigation by Univision and ColumbiaJournalism Investigations has found. In 25% of the projects abackground check would have alerted the Trump Organizationof the allegations that their partners faced before signing thecontract.
The cases involve development company principals, thecompanies themselves, a broker for the Trump brand or amajor investor being targeted by law enforcement action.
Univision and Columbia Journalism Investigations spoke byphone with Trump-lawyer, Alan Garten, in January seekingcomment for this report. Upon his request, detailed questionswere submitted by email. At the time of publication Gartenhad not responded, despite several follow-up phone calls andemails.
Eight projects involved a principal from a developmentcompany, a brand broker or an investor who was convicted ofa crime. Seven other projects involved participantsinvestigated by foreign governments.
An examination of federal investigations, court records,contracts and corporate records shows that Trump’s partners
Villa Trump BrazilBRAZIL
1
Trump Towers IstanbulTURKEY
2
Trump Tower BatumiGEORGIA
3
Trump International BakuAZERBAIJAN
4
World Golf Club DubaiUAE
5
Trump Towers RioBRAZIL
6
Trump Hotel RioBRAZIL
7
Trump Tower DubaiUAE
8
Trump Tower VancouverCANADA
9
Trump Tower Punta del EsteURUGUAY
10
Trump Towers PuneINDIA
11
Trump Towers GurgaonINDIA
12
Trump Tower KolkataINDIA
13
Trump Int. Golf ClubPUERTO RICO
14
Trump Tower Century CityPHILIPPINES
15
Trump Cap CanaDOMINICAN R.
16
Int. Golf Club DubaiUAE
17
Trump Ocean Club PanamaPANAMA
18
Elite TowerISRAEL
19
Trump Tower MumbaiINDIA
20
Trump Baja MexicoMEXICO
21
Trump Tower Lido LakeINDONESIA
22
Trump Tower BaliINDONESIA
23
Trump Tower TorontoCANADA
24
Trump Tower Delhi NCRINDIA
25
Trump Island VillasSAINT VINCENT AND THE GRENADINES
faced an array of allegations including money laundering,bribery, corruption and transnational drug traf�cking.According to The Boston Globe, Wallach was arrested 15 timesin �ve states for crimes such as forgery and grand larcenybefore being hired by Trump. He worked for the TrumpOrganization from 1990 to about 2001 or 2002.
"Donald doesn’t do due diligence on anything, no matter whatit is," Wallach said. “He works by his gut – his gut directs himon projects, on whatever he’s working on.”
The head of Trump’s �rst real estate licensing partner, DaewooGroup, was sentenced to prison for fraud in 2006, several yearsafter the company’s buildings had acquired the Trump name.
But unlike in South Korea, it would have been easier forcompliance experts to spot criminal allegations in at leastseven of the projects due to the existence of public records.
THE 13 PARTNERS, BROKERS OR INVESTORS WHO HAVEFACED CRIMINAL ALLEGATIONS
TRUMP INTERNATIONAL GOLF CLUB ANDTRUMP WORLD GOLF CLUBHUSSAIN SAJWANI
Sajwani was sentenced to �ve years in prison in 2011 afterfacing corruption charges due to a fraudulent landpurchase in Egypt. The executive appealed the Egyptiancourt's decision and took the case to arbitration where hesettled and paid $17 million.
Sajwani has said in the past that the charges werepolitically motivated.
This investigation includes deals for which the TrumpOrganization created speci�c limited liability companies tolicense its brand or manage a property, where marketingmaterials suggest some form of contract was signed, or wheredocuments show the company was paid.
The �ndings call into question whether Trump and his adultchildren properly vetted potential partnering companies andtheir executives before contracts were signed. The TrumpOrganization maintains that its procedures for due diligenceon new projects are rigorous, but the company has notdisclosed what that process entails.
In several cases, a quick search would have revealed red �agsconcerning the backgrounds of a number of potentialpartners, but the Trump Organization was either unaware ofthe warning signs or chose to ignore them.
In Brazil, one investor was charged with fraud – although hewas later acquitted – while another was charged with settingup a scheme for exclusive access to government contractsand larceny. In Turkey, the broker for the Trump brand wassentenced to six years in prison for drug traf�cking. An earlypartner in Toronto was convicted of fraud and embezzlement,and a major shareholder of the developer in Vancouver wentto prison for permitting a false report to be �led with �nancialauthorities. In the United Arab Emirates, a developerpartnering with the Trump Organization was convicted ofcorruption by a court in Egypt.
According to one former Trump Organization executive, whospoke on the condition of anonymity, no due diligence wascarried out on partners in Toronto. The developer, LeibWaldman, was excluded from the project after news reportsabout his convictions came to light in 2002.
Michel Rodriguez, a former director of �nance at Trump’sDominican partner, Cap Cana S.A., said the Trump
HE WAS WILLING TO DO BUSINESS WITHPEOPLE WHEN OTHERS WEREN’T ”“
Organization did not perform any due diligence on thecompany. "They don't do due diligence," he said.
Usually due diligence is done with the collaboration of thecompany in question, but it can also be done without it.
In 2009, the Trump Organization did pay for an audit of CapCana's accounts, but only to �nd out how much the companyowed the organization. That same year, the local SupremeCourt ordered prosecutors to investigate one of Cap Cana'sshareholders after a disgruntled partner �led a complaintagainst him and others in court, accusing them of fraud andmoney laundering. No one at Cap Cana was charged.
In the country of Georgia, Trump’s partners paid for a limiteddue diligence report about themselves to discredit allegationsthat one of the main shareholders was involved in a criminalorganization. The report failed to mention the company’sclose relationship with a defrauded bank, which prompted aninvestigation by local prosecutors in 2013, the year after theSilk Road Group partnered with the Trump Organization. Nocriminal charges were brought against anyone in the SilkRoad Group, and a settlement between the company and thedefrauded bank was signed in 2014.
Donald Trump Jr. and Eric Trump, far right, are seen with developers of the TrumpTower in Vancouver. Joo Kim Tiah (blue) stands next to his father, who wasconvicted of fraud and sentenced to one year in prison PHILLIP CHIN/GETTY IMAGES
Jan deRoos, a professor of hotel �nance and real estate atCornell University, said the standard process in the hotelindustry is to underwrite the deal itself. International chainsthat license out their names, such as Hilton or Marriott,typically analyze the local market, the sponsor and the projectbefore agreeing to anything. DeRoos describes the process asa three-legged stool: “Any one of them doesn’t pass and it fallsdown,” he said.
Another way to characterize the troubling partnerships is as acompetitive advantage for the Trump Organization, deRoossaid. “He was willing to do business with people when othersweren’t,” he said of Trump.
In the past, when the media revealed criminal ties involvingTrump business partners, members of the Trump Organizationdefended the company by saying they had no knowledge ofwrongdoing. They claimed their participation was limited tolicensing, a type of contract experts say doesn't typicallyentail legal liability for any eventual criminal behavior aproject might pro�t from.
L. Burke Files, president of the International Due DiligenceOrganization, said the Trump Organization’s approach to duediligence is not unusual. “For the most part, the efforts madeby international businessmen on due diligence is atrocious,"he said. "They’re more often interested in concluding the dealthan �guring out who their counterparties are."
In the end, the Trump Organization got what it wanted, hesaid.
“They paid him a $10 million licensing fee, what does he care?”Files said. “He’s not an owner. He’s not a partner. He’s alicensing agent.”
After Trump’s election as president of the United States in2016, the need for due diligence is arguably greater than whenhe was an ordinary citizen. During the last year there has beenintense public debate over potential con�ict of interestbetween the Trump brand and his public of�ce.
Due diligence isn’t only used to determine a company’spotential ties to criminal activity; it’s also necessary to assesswhether a project is �nancially viable. It is unclear if theTrump Organization attempted to �nancially assess itspartners, but only six of the 27 international deals tracked byUnivision currently operate with the Trump brand. Ten othersremain under construction, and the rest were eitherabandoned or had the Trump name removed.
Last week, Donald Trump Jr. visited India to pursue one ofthose projects.
Several Trump projects around the world faced �nancialhurdles that eventually led to their failure, or bankruptcyissues. Trump Ocean Club in Panama, Trump InternationalHotel and Tower Toronto and a golf course in Puerto Rico allwent bankrupt after completion. Plans failed to reach theconstruction phase in projects in Mexico, Israel, Georgia,Dubai, and in two separate projects in Brazil.
KEY
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27 were announced, but 11 already have failed or removed the brand
WHAT HAPPENED TO TRUMP-BRANDEDINTERNATIONAL PROJECTS?
A detailed analysis of a number of those partnerships reveallinks to high-ranking politicians in the countries visited bythe Trumps. Over half of Trump’s 25 foreign partners wereclosely connected to political �gures in their home countries.
The chairman of Lodha Group, Trump’s partner in Mumbai,India, is also vice president of the ruling party in the IndianParliament. A former of�cial at the mayor's of�ce in Rio deJaneiro was the leading �gure in a hotel project in the city.Jorge Subero, a vicepresident at Cap Cana, the developmentpartner in the Dominican Republic, is the son of the formerpresident of the country’s supreme court.
In other instances, politicians played the part of brokers. InGeorgia, former President Mikhail Saakashvili was present inseveral meetings between the developers and Trump. In 2012,the president showed his appreciation in front of the camerasby claiming Trump was making a $250 million investment inhis country, when Trump actually was getting paid to licensehis name to the developer. The Trump project never got off theground, and the two sides announced a split in late 2016.
Ricardo Martinelli, who was Panama’s president when theTrump Ocean Club Panama was inaugurated in 2011, alsothanked Trump for an investment Trump did not make. "Wewant to thank Mr. Trump for coming to Panama, investing inPanama," Martinelli said at the project's inauguration event."And for giving us Panamanians one of the most importantand beautiful buildings in Panama City."
The Panama tower received a substantial tax break thatexempted any imports for construction and all revenuegenerated in the �rst 10 years.
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IT IS A VERY IMPORTANT PART OF OURBUSINESS. WE ARE A FAMILY-RUNBUSINESS ”“
Our investigation con�rmed that Trump-branded projectsreceived tax incentives in at least four other countries.Projects that failed in Georgia, Brazil, Puerto Rico and theDominican Republic all received government support. There isno evidence that the incentives were due to local partnersbeing politically connected or that the Trump Organizationhad any part in obtaining them.
A family business
Trump and his family have made millions of dollars fromthese marketing strategies, lending the impression thatTrump and his company were co-developers or equityinvestors. In reality, his involvement was limited to thelicensing of his name or the management of a hotel or golfresort. Univision found this to be the case in projects plannedfor Georgia, Mexico, Panama, the Dominican Republic, Braziland Azerbaijan.
Hundreds of buyers in the failed Trump Ocean Resort in BajaCalifornia, Mexico, �led a lawsuit claiming that Trump and hischildren, Ivanka and Donald Trump Jr., participated in afraudulent scheme that led buyers to believe the project wasdeveloped by the Trump Organization. Ivanka played a majorrole in this project and in misleading buyers, the complaintalleged. The developers eventually agreed to a $7.2 million
Trump shakes hands with former Georgian President Mikhail Saakashvili, under asign that reads “Trump Invests in Georgia” in 2012 EMMANUEL DUNANDA/AFP
settlement to avoid litigation. The Trumps also agreed to pay asettlement for an undisclosed amount.
Ivanka, Donald Jr. and Eric Trump have managed the familybrand for over a decade. Since 2006, when a deal was struck tobuild the Trump Ocean Club in Panama, they have traveled theworld meeting potential partners and looking for newinvestors. They have represented the Trump brand and metwith partners in Dubai, Panama, Mexico, Canada, Brazil, India,Uruguay, the Dominican Republic, Turkey, Azerbaijan andIndonesia.
Ivanka Trump explained during a 2011 deposition for a lawsuitrelated to a failed Trump-licensed project in Tampa, Florida,that both partnerships and licensing agreements work thesame: The Trump children have initial meetings withpotential partners, and “if we think the partners are crediblepartners ... then we will introduce those people or introducethat project to my father,” Ivanka Trump said. Donald Trumpthen decided if a project should move forward.
In his deposition for the same lawsuit, Eric Trumpacknowledged the value of having the entire family involvedin each project. “It is a very important part of our business,” hesaid. “We are a family-run business.”
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In recent months, Donald Trump's children have facedscrutiny for their participation in the company's dealings. AnOctober article by ProPublica, WNYC and The New Yorkerdescribed how Ivanka Trump and Donald Trump Jr. were closeto being charged with fraud in 2012 for giving falseinformation about sales numbers to prospective buyers of theTrump SoHo project in New York.
There is no evidence that the Trump Organization violatedany laws in its international deals. Of the 27 projects, threehave been subject to investigations by local prosecutors: twoin Brazil and one in India. No one from the TrumpOrganization has been charged or directly implicated in thoseinvestigations.
The pattern of failing to conduct due diligence or deciding toignore red �ags when accepting new partners shows that theTrump Organization has taken legal risks by accepting moneyfrom people involved in corruption or criminal enterprises.But if criminal activity was found in any of these projects, it isunclear if Trump or his family would be criminally liable.
Being paid with proceeds of a crime is considered moneylaundering. Stefan Cassella, former deputy chief of the U.S.Justice Department’s Asset Forfeiture and Money LaunderingSection, said in an interview with Univision that afundamental question regarding criminal liability is whetherfunds in a particular operation are obviously the product ofcriminal proceeds, and whether one was aware of it.
Donald Trump Jr, Ivanka Trump and Eric Trump have run the family business for aover a decade. Donald Jr. speaks with Eduardo Paes, then mayor of Rio deJaneiro (ANTONIO LACERDA/EFE)Ivanka and Eric are pictured with a developer inUruguay. (SEBASTIÁN UMPIÉRREZ/EFE) Donald Jr. and Eric at an event with theirpartner in Vancouver, Canada. (STEPHANIE LAMY/AFP)Ivanka walks with RogerKha�f, a developer in Panama. (ARTURO WONG/EFE)
Cassella also mentioned the concept of willful blindness, inwhich “you willfully try not to learn the source of the money.”In that case, a person could be held criminally liable.
The Foreign Corrupt Practices Act (FCPA) bars U.S. companiesfrom pro�ting when bribes are paid to foreign of�cials.However not a single FCPA case has ever been brought againsta U.S. company that licensed its name to a local partner foundguilty of committing a crime.
The licensing agreements reviewed by Univision containclauses that protect the Trump Organization and allow it toopt out if a partner is convicted of a crime or felony.Additionally, as two of the contracts show, if a partner joins amoney laundering scheme, they are required to notify theTrump Organization in writing that they did so. The partner isalso expected to con�rm that they were not involved in moneylaundering at the time the deal was signed.
To date, these speci�c sections haven’t been publicly cited as acause for separation between the Trump Organization and anyof its partners, according to legal documents and newsreports.
Even if a project is facing a criminal investigation or fendingoff �nancial ruin, Trump still makes money. In Brazil, aspartners faced a federal probe, the Trump Organizationstepped away from the deal and presented a bill for $32.7million. It's unclear how much of it was paid. And in theDominican Republic, after the project was bailed out by agovernment-owned bank, the Trumps charged the companyfor their cut. Nothing was ever built.
As Wallach, the former Trump Organization executive,remembers it, Donald Trump isn't too concerned about hispartners.
"As far as Donald’s concerned, screw the partner as much asyou can and don’t think about the future, just think about thepresent," he said. "Maximize what I get out of the deal, and goon from there."
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Contributors: Columbia Journalism School’s 2017 Using Data to InvestigateAcross Borders class, Jeremy Blackman, Ritu Sarin (The Indian Express) and The
