Robert Reich's video speaks for its self!
Showing posts with label Money. Show all posts
Showing posts with label Money. Show all posts
Wednesday
In retrospect: Donald J. Trump
On January 20th, 2017, Donald J. Trump took power
as president of the United States. He had openly campaigned on carnage. He ran
for president promising to give the rich more, to bring back torture, to wage a
war against immigrants, and to build his wall. He was gleeful in pledging to
make America’s healthcare system even worse. He promised to bring back torture,
to fill Guantanamo back up, to kill the families of suspected terrorists. He
said he would ban Muslims from entering the United States. He encouraged police
to be more brutal, has given aid and comfort to Nazis and white supremacists.
He openly promised to wage war against women and their bodies, to pummel the
environment, to benefit the already ultra-rich. He is corrupt to the bone, has
been for a very long time, and he’s proud of it. He brought into his inner
circle a dangerous cabal of neo-fascists, white supremacists and, more
recently, neoconservatives.
And what now?
Tuesday
How Did the F.A.A. Allow the Boeing 737 Max to Fly?
The plane
involved in the Lion Air tragedy was also a Boeing 737 Max 8, and
investigators suspect that the cause of that crash was a malfunctioning
automated-flight-control feature, which caused the aircraft’s nose to
dip repeatedly during its initial ascent out of the airport in Jakarta.
The automated-flight-control feature on the 737 Max, which is called a
Maneuvering Characteristics Augmentation System (MCAS),
was designed to prevent a high-speed stall. It works by tilting part of
the horizontal stabilizer in the tail of the plane, and investigators
at the Ethiopian crash site have found physical evidence that this part of the plane was, indeed, configured to dive.
Radar data has indicated that both planes jerked up and down in erratic fashion after takeoff. The captain of the Ethiopian Airlines flight reported a “flight control” problem to the air-traffic control tower. Data from the black box of the Lion Air plane showed that its pilots repeatedly pulled back on the control yoke to try to disengage the MCAS and level the flight path of the plane. “The pilots fought continuously until the end of the flight,” an official from the Indonesian National Transportation Safety Committee said in November, after the plane’s black box was recovered.
This is all frightening enough, and it raises serious questions about why Boeing didn’t tell airlines and pilots much more about the MCAS—in particular, how to disengage it in an emergency—before the 737 Max was put into service in 2017. Boeing has delivered three hundred and seventy-six of these planes to airlines around the world. Practically all of them have now been grounded out of safety concerns.
Boeing has promised a software fix to address some of the potential problems created by the MCAS. That’s too little, too late, of course, and it doesn’t address the even larger issue of how the 737 Max was allowed to fly in the first place. On Sunday, the Seattle Times, the home-town newspaper of Boeing’s commercial division, published the results of a lengthy investigation into the federal certification of the 737 Max. It found that the F.A.A. outsourced key elements of the certification process to Boeing itself, and that Boeing’s safety analysis of the new plane contained some serious flaws, including several relating to the MCAS.
The Boeing analysis “understated the power of the new flight control system,” the Seattle Times article said. “When the planes later entered service, MCAS was capable of moving the tail more than four times farther than was stated in the initial safety analysis document.” The Boeing analysis also “failed to account for how the system could reset itself each time a pilot responded, thereby missing the potential impact of the system repeatedly pushing the airplane’s nose downward.”
In the case of the Lion Air flight, investigators suspect the MCAS was reacting to faulty data gathered from a single flight sensor mounted on the fuselage. According to the Seattle Times article, the Boeing analysis assessed the failure of the MCAS system as “as one level below ‘catastrophic.’ But even that ‘hazardous’ danger level should have precluded activation of the system based on input from a single sensor—and yet that’s how it was designed.”
How can a manufacturer of something as complex and potentially dangerous as a passenger jet be allowed to play such a large role in deciding whether its product is safe? It turns out that the F.A.A., with congressional approval, has “over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes,” the Seattle Times said. In the case of the 737 Max, which is a longer and more fuel-efficient version of previous 737s, Boeing was particularly eager to get the plane into service quickly, so it could compete with Airbus’s new A320neo.
Early on, employees of the F.A.A. and Boeing decided how to divide up the certification work. But halfway through the process “we were asked by management to re-evaluate what would be delegated,” a former F.A.A. safety engineer told the Seattle Times. “Management thought we had retained too much at the FAA:”
“There wasn’t a complete and proper review of the documents,” the former engineer added. “Review was rushed to reach certain certification dates.
The new revelations don’t stop there. “Federal prosecutors and Department of Transportation officials are scrutinizing the development of Boeing Co.’s 737 MAX jetliners,” the Wall Street Journal reported on Monday. “A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages,” a source told the paper. (The Justice Department and Department of Transportation declined to comment on the Journal’s reporting.)
The criminal investigation began well before the crash of the Ethiopian Airlines Flight. It’s not clear yet whether it is focussing on the MCAS system, the report in the Journal said. But, that article added, “In the U.S., it is highly unusual for federal prosecutors to investigate details of regulatory approval of commercial aircraft designs, or to use a criminal probe to delve into dealings between the FAA and the largest aircraft manufacturer the agency oversees. Probes of airliner programs or alleged lapses in federal safety oversight typically are handled as civil cases, often by the DOT inspector general.”
In a statement to the Seattle Times, Boeing said that the F.A.A. “considered the final configuration and operating parameters of MCAS during MAX certification, and concluded that it met all certification and regulatory requirements.” The F.A.A., in a statement issued on Sunday, said that the “737 MAX certification program followed the FAA’s standard certification process.”
Given that two brand-new 737 Maxes have plunged to earth, befuddling their pilots and costing three hundred and forty-six people their lives, these statements are hardly reassuring. We need to know a lot more about how the FAA allowed this plane to take to the air.
Radar data has indicated that both planes jerked up and down in erratic fashion after takeoff. The captain of the Ethiopian Airlines flight reported a “flight control” problem to the air-traffic control tower. Data from the black box of the Lion Air plane showed that its pilots repeatedly pulled back on the control yoke to try to disengage the MCAS and level the flight path of the plane. “The pilots fought continuously until the end of the flight,” an official from the Indonesian National Transportation Safety Committee said in November, after the plane’s black box was recovered.
This is all frightening enough, and it raises serious questions about why Boeing didn’t tell airlines and pilots much more about the MCAS—in particular, how to disengage it in an emergency—before the 737 Max was put into service in 2017. Boeing has delivered three hundred and seventy-six of these planes to airlines around the world. Practically all of them have now been grounded out of safety concerns.
Boeing has promised a software fix to address some of the potential problems created by the MCAS. That’s too little, too late, of course, and it doesn’t address the even larger issue of how the 737 Max was allowed to fly in the first place. On Sunday, the Seattle Times, the home-town newspaper of Boeing’s commercial division, published the results of a lengthy investigation into the federal certification of the 737 Max. It found that the F.A.A. outsourced key elements of the certification process to Boeing itself, and that Boeing’s safety analysis of the new plane contained some serious flaws, including several relating to the MCAS.
The Boeing analysis “understated the power of the new flight control system,” the Seattle Times article said. “When the planes later entered service, MCAS was capable of moving the tail more than four times farther than was stated in the initial safety analysis document.” The Boeing analysis also “failed to account for how the system could reset itself each time a pilot responded, thereby missing the potential impact of the system repeatedly pushing the airplane’s nose downward.”
In the case of the Lion Air flight, investigators suspect the MCAS was reacting to faulty data gathered from a single flight sensor mounted on the fuselage. According to the Seattle Times article, the Boeing analysis assessed the failure of the MCAS system as “as one level below ‘catastrophic.’ But even that ‘hazardous’ danger level should have precluded activation of the system based on input from a single sensor—and yet that’s how it was designed.”
How can a manufacturer of something as complex and potentially dangerous as a passenger jet be allowed to play such a large role in deciding whether its product is safe? It turns out that the F.A.A., with congressional approval, has “over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes,” the Seattle Times said. In the case of the 737 Max, which is a longer and more fuel-efficient version of previous 737s, Boeing was particularly eager to get the plane into service quickly, so it could compete with Airbus’s new A320neo.
Early on, employees of the F.A.A. and Boeing decided how to divide up the certification work. But halfway through the process “we were asked by management to re-evaluate what would be delegated,” a former F.A.A. safety engineer told the Seattle Times. “Management thought we had retained too much at the FAA:”
“There was constant pressure to re-evaluate our initial decisions,” the former engineer said. “And even after we had reassessed it … there was continued discussion by management about delegating even more items down to the Boeing Company.”Even the work that was retained, such as reviewing technical documents provided by Boeing, was sometimes curtailed.
“There wasn’t a complete and proper review of the documents,” the former engineer added. “Review was rushed to reach certain certification dates.
The new revelations don’t stop there. “Federal prosecutors and Department of Transportation officials are scrutinizing the development of Boeing Co.’s 737 MAX jetliners,” the Wall Street Journal reported on Monday. “A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages,” a source told the paper. (The Justice Department and Department of Transportation declined to comment on the Journal’s reporting.)
The criminal investigation began well before the crash of the Ethiopian Airlines Flight. It’s not clear yet whether it is focussing on the MCAS system, the report in the Journal said. But, that article added, “In the U.S., it is highly unusual for federal prosecutors to investigate details of regulatory approval of commercial aircraft designs, or to use a criminal probe to delve into dealings between the FAA and the largest aircraft manufacturer the agency oversees. Probes of airliner programs or alleged lapses in federal safety oversight typically are handled as civil cases, often by the DOT inspector general.”
In a statement to the Seattle Times, Boeing said that the F.A.A. “considered the final configuration and operating parameters of MCAS during MAX certification, and concluded that it met all certification and regulatory requirements.” The F.A.A., in a statement issued on Sunday, said that the “737 MAX certification program followed the FAA’s standard certification process.”
Given that two brand-new 737 Maxes have plunged to earth, befuddling their pilots and costing three hundred and forty-six people their lives, these statements are hardly reassuring. We need to know a lot more about how the FAA allowed this plane to take to the air.
Sunday
Know Your Washington Buzzwords
Scott Horsley
As Congress prepares to debate a year-end spending bill and President Trump prepares for trade talks with China's President Xi Jinping, these are some terms you're likely to hear used — and occasionally misused — by politicians and pundits. Bone up on your political and economic vocabulary so you'll sound smart on the holiday party circuit.
The deficit has been growing rapidly as a result of increased spending on the military and domestic programs as well as the 2017 tax cut, which ate into government revenues. Red ink is expected to top $1 trillion in the 2019 fiscal year. That's unusual at a time when the economy is growing and the country is not mired in a widespread war. Ordinarily, deficits shrink in good times and grow during recessions.
Debt is not necessarily bad. It can reflect productive investments by the government, just as a household might borrow to buy a home or fund a college education. But with debt comes the obligation to make interest payments. And as this interest obligation grows — as a result of rising debt and/or rising interest rates — it limits the government's ability to spend on other needs and wants. If the government's debt grows large enough, its demand for borrowed money can also "crowd out" private borrowers, making it more expensive for families and businesses to find the money they need to finance their own investments.
The United States typically runs a trade deficit in goods and a trade surplus in services. In 2017, for example, Americans bought $807 billion more goods from other countries than we sold to other countries. But foreigners bought $255 billion more services from Americans than we bought from them. The combined trade deficit in goods and services was thus $552 billion — the goods deficit minus the services surplus. (President Trump sometimes ignores the trade surplus in services to focus on the goods deficit alone.)
In the first nine months of 2018, the trade deficit grew by 10 percent, as growth in imports outpaced growth in exports. Most economists don't see that as a problem.
The term itself is something of an exaggeration, since essential government workers (such as air traffic controllers and Border Patrol agents) keep doing their jobs. And major government programs like Social Security don't require annual authorization, so benefits keep going out (although new claims may not be processed).
But some popular and highly visible government functions may be shut down, increasing pressure on lawmakers to cut a deal. (Depending on which party controls the executive branch, there are opportunities to maximize or minimize the effects of a government shutdown.) Some federal workers may not be paid during a shutdown, although Congress typically authorizes back pay when a shutdown ends — making this a costly exercise in political theater.
In the century since, Congress has repeatedly raised the debt ceiling to accommodate growing debt, like a frustrated dieter who keeps buying bigger belts. The debt ceiling has generally not caused lenders to question the federal government's willingness to repay what it owes, although a drawn out fight over raising the debt ceiling in 2011 prompted one credit rating agency to sound the alarm. The debt ceiling has been temporarily suspended but is due to go back into force in March 2019.
As Congress prepares to debate a year-end spending bill and President Trump prepares for trade talks with China's President Xi Jinping, these are some terms you're likely to hear used — and occasionally misused — by politicians and pundits. Bone up on your political and economic vocabulary so you'll sound smart on the holiday party circuit.
Federal deficit
When the federal government spends more than it collects in taxes, which it does most years, it has to borrow money to make up the difference. That gap is the federal deficit. (When the government collects more than it spends, that's called a "surplus," but don't worry. That's not a term you're likely to hear very often.)
The deficit has been growing rapidly as a result of increased spending on the military and domestic programs as well as the 2017 tax cut, which ate into government revenues. Red ink is expected to top $1 trillion in the 2019 fiscal year. That's unusual at a time when the economy is growing and the country is not mired in a widespread war. Ordinarily, deficits shrink in good times and grow during recessions.
Federal debt
The debt is the sum of accumulated annual deficits, akin to the accumulated balance on the nation's credit card. Each year the government runs a deficit, the debt increases by that amount. (In rare years when the government runs a surplus, it has the opportunity to pay down debt.)
Debt is not necessarily bad. It can reflect productive investments by the government, just as a household might borrow to buy a home or fund a college education. But with debt comes the obligation to make interest payments. And as this interest obligation grows — as a result of rising debt and/or rising interest rates — it limits the government's ability to spend on other needs and wants. If the government's debt grows large enough, its demand for borrowed money can also "crowd out" private borrowers, making it more expensive for families and businesses to find the money they need to finance their own investments.
Trade deficit
If a country imports more than it exports, that difference is called the trade deficit. If a country sells more to other countries than it buys from those countries, that's called a trade surplus.
The United States typically runs a trade deficit in goods and a trade surplus in services. In 2017, for example, Americans bought $807 billion more goods from other countries than we sold to other countries. But foreigners bought $255 billion more services from Americans than we bought from them. The combined trade deficit in goods and services was thus $552 billion — the goods deficit minus the services surplus. (President Trump sometimes ignores the trade surplus in services to focus on the goods deficit alone.)
In the first nine months of 2018, the trade deficit grew by 10 percent, as growth in imports outpaced growth in exports. Most economists don't see that as a problem.
Government shutdown
Each year, Congress has to authorize spending for much of the federal government. Sometimes, lawmakers have difficulty reaching consensus in time, and the spending authorization lapses. Government employees used to ignore those congressional squabbles and keep working as usual. But during the Carter administration, Attorney General Benjamin Civiletti issued a legal opinion saying work could not continue in the absence of congressional authorization. That was the beginning of the "government shutdown."
The term itself is something of an exaggeration, since essential government workers (such as air traffic controllers and Border Patrol agents) keep doing their jobs. And major government programs like Social Security don't require annual authorization, so benefits keep going out (although new claims may not be processed).
But some popular and highly visible government functions may be shut down, increasing pressure on lawmakers to cut a deal. (Depending on which party controls the executive branch, there are opportunities to maximize or minimize the effects of a government shutdown.) Some federal workers may not be paid during a shutdown, although Congress typically authorizes back pay when a shutdown ends — making this a costly exercise in political theater.
Partial government shutdown
This year Congress has already authorized spending for some major parts of the government, including the Defense Department, the VA and the Department of Health and Human Services. So those agencies are not subject to a government shutdown, if one occurs. Other departments and agencies could be affected, however, including the departments of Commerce, Justice, State, Transportation, Agriculture, Interior, HUD and the EPA.
Debt ceiling
The debt ceiling is a relic of World War I, when Congress set a limit on the federal government's overall authority to borrow money. Note that it doesn't limit the government's ability to spend money or require the government to collect more in taxes when spending outstrips revenue.
In the century since, Congress has repeatedly raised the debt ceiling to accommodate growing debt, like a frustrated dieter who keeps buying bigger belts. The debt ceiling has generally not caused lenders to question the federal government's willingness to repay what it owes, although a drawn out fight over raising the debt ceiling in 2011 prompted one credit rating agency to sound the alarm. The debt ceiling has been temporarily suspended but is due to go back into force in March 2019.
Thursday
Michael Cohen Pleads Guilty & Implicates Trump as Paul Manafort Is Convicted. Is Impeachment Next?
Transcript:
AMY GOODMAN: Talk of the possible impeachment of President Trump is growing in Washington after Tuesday’s stunning legal developments. In New York, Trump’s longtime personal lawyer and fixer, Michael Cohen, pleaded guilty to eight criminal charges, including tax evasion, bank fraud and campaign finance violations. Two hundred miles away in Virginia, Trump’s former campaign chair Paul Manafort was found guilty of eight charges related to tax and bank fraud, as well as hiding a foreign account.The Cohen case is likely to put the president in the most legal jeopardy. Michael Cohen worked for Trump from 2006 until this year. He admitted in court he arranged to illegally pay out money to two women—an adult film star and a Playboy model—to keep them from speaking during the 2016 campaign about their affairs with Donald Trump. Cohen said the payments were made, quote, “in coordination with and at the direction of a candidate for federal office” and that they were made, quote, “for the principal purpose of influencing the election,” unquote.
Cohen’s lawyer, Lanny Davis, wrote on Twitter, “If those payments were a crime for Michael Cohen, then why wouldn’t they be a crime for Donald Trump?” Davis later appeared on MSNBC and said Cohen is willing to speak with special counsel Robert Mueller about, quote, “a conspiracy to collude” with Russia during the 2016 presidential campaign. Davis also told The Washington Post Cohen knows about Trump’s participation in a criminal conspiracy to hack into Democratic Party officials’ emails during the 2016 election.
Michael Cohen becomes the fourth former Trump official to plead guilty to criminal charges. He joins former National Security Adviser Michael Flynn, Trump’s former campaign—deputy campaign manager Rick Gates and former Trump foreign policy adviser George Papadopoulos. Michael Cohen will be sentenced on December 12th. He’ll likely be sentenced to four to five years in prison.
Meanwhile, in Virginia, a jury convicted Paul Manafort on eight of 18 charges, but the jury could not reach a verdict on the other counts. Sentencing experts expect him to receive a prison term of about 10 years. The Manafort charges stem from special counsel Robert Mueller’s investigation into Russian meddling in the 2016 election, but the case against Manafort focused on the work he did before he became President Trump’s campaign manager. Manafort was accused of hiding millions of dollars earned in Ukraine in overseas bank accounts and failing to pay taxes on the money. On Tuesday, President Trump briefly spoke with reporters about the Manafort verdict.
PRESIDENT DONALD TRUMP: I feel badly for both. I must tell you that Paul Manafort is a good man. He was with Ronald Reagan. He was with a lot of different people over the years. And I feel very sad about that. It doesn’t involve me, but I still feel—you know, it’s a very sad thing that happened. This has nothing to do with Russian collusion. This started as Russian collusion. This has absolutely nothing to do—this is a witch hunt, and it’s a disgrace.AMY GOODMAN: The question now is whether Michael Cohen and Paul Manafort will cooperate with Mueller’s investigation in exchange for lesser sentences. Or will President Trump pardon one or both men? To help answer these questions and more, we’re joined by investigative journalist Marcy Wheeler. She runs the website EmptyWheel.net, joining us from Michigan.
Marcy, welcome to Democracy Now! An epic day yesterday, when two of President Trump’s—well, his closest adviser, fixer, his personal lawyer, Michael Cohen, and his former campaign chair, Paul Manafort, both guilty. Talk about the verdicts yesterday.
MARCY WHEELER: Yeah, it’s not often we need a split screen for guilty verdicts. Usually that’s reserved for sporting events. But the Manafort guilty verdicts were pretty much expected, because the case against him was a slam dunk. It was tax fraud. It was some bank fraud.
The charges that the jury was not able to reach a verdict on involved charges where Rick Gates’s testimony was central, so it seems like some people on the jury may not have found him all that credible, and also one charge where—Trump says it didn’t involve him. That’s not actually true. There was one charge where Manafort was trying to get a loan in 2016 from a banker in Chicago and promising him positions once Trump took the White House. And the impression is the jury decided that he was going to get that—Manafort was going to get that loan regardless of what kind of claims he made to the banker. And so, those are the charges that he wasn’t found guilty on.
But they’re both tax cheats. They’re both involved in other crimes. As you emphasized, the very interesting thing for Trump are the two hush money payments involved with the Cohen crime, because, there, he quite clearly said, and the criminal information said—I think it was the 46th word in the criminal information, named—named Trump, basically—didn’t name him by name, but said, you know, the person went on to become president of the United States—
AMY GOODMAN: Well, let’s go—
MARCY WHEELER: —and named him as—
AMY GOODMAN: Go ahead.
MARCY WHEELER: Go ahead. And named him as being part of the conspiracy to pay off these women so as to hide these affairs for the election.
AMY GOODMAN: Let’s go to U.S. Deputy Attorney Robert Khuzami announcing the felony charges that Michael Cohen pled guilty to yesterday.
ROBERT KHUZAMI: Today, as you heard, Michael Cohen pled guilty to eight felony charges. Five of those dealt with tax evasion for the years 2012 through 2016, in which he failed to report approximately $4.1 million in reported income. … In addition, Mr. Cohen pled guilty to two campaign finance charges, one for causing an unlawful corporate contribution and a second one for personally making an excessive personal contribution, both for the purpose of influencing the 2016 election. In addition, what he did was he worked to pay money to silence two women who had information that he believed would be detrimental to the 2016 campaign and to the candidate and the campaign. In addition, Mr. Cohen sought reimbursement for that money by submitting invoices to the candidate’s company which were untrue and false.AMY GOODMAN: So, Marcy Wheeler, this the—really the biggest news. While Paul Manafort was the campaign chair for President Trump, you have Michael Cohen not only saying he committed a crime—he wasn’t even indicted, he just pled guilty yesterday, in a kind of unusual move where this happened all very fast. He not only said he was guilty, but he said that the president was guilty of ordering him to do this.
MARCY WHEELER: Right. In his statement in the courtroom—we don’t get cameras there, so we can’t play it. But in his statement in the courtroom, he was very clear that he did this with the involvement, at the behest of Donald Trump. So, while the Russian investigation is going to name Trump, and technically sort of did in the GRU indictment, it made it clear that he asked for Russia to hack Hillary, and they immediately did. But here, he is named explicitly, so it’s the first time in these wide-ranging legal investigations that he is being named and being accused of committing a crime—to cheat to get elected, basically.
AMY GOODMAN: Let’s go to Michael Cohen’s attorney, Lanny Davis, speaking Tuesday night on MSNBC.
LANNY DAVIS: Mr. Cohen has knowledge on certain subjects that should be of interest to the special counsel, and is more than happy to tell the special counsel all that he knows, not just about the obvious possibility of a conspiracy to collude and corrupt the American democracy system in the 2016 election—which the Trump Tower meeting was all about—but also knowledge about the computer crime of hacking and whether or not Mr. Trump knew ahead of time about that crime and even cheered it on. And we know he publicly cheered it on. But did he also have private information?AMY GOODMAN: Now, that’s Michael Cohen’s attorney, Lanny Davis. Talk about the significance of what he’s saying, and what kind of information he’s offering to Robert Mueller, to Mueller.
MARCY WHEELER: Well, it’s not actually clear. Cohen has been pursuing a cooperation agreement for well over a month, probably a couple of months, and Mueller did not take him up on that, at least as far as has been made public. Clearly, Cohen implicated Trump in the hush payments, but he has not—as part of yesterday’s plea agreement, he has not publicly implicated Trump in any of the Russia-related crimes. So I’m not convinced that this guilty plea is more important than Manafort’s guilty verdicts yesterday, because Trump a long time ago said, “I think I’m OK, so long as Paul Manafort doesn’t flip on me. Paul Manafort is the only one who can really bring me down,” because it is true, or Cohen claims that he knows information about when Trump knew certain things about the hack and leak. But even Omarosa says that she already talked to Mueller’s people about that.
So, it’s possible—I mean, several things are possible, Amy. One is that Cohen’s right, and he will go talk to Mueller, and he will get some lesser sentence because he does it. It’s possible that Mueller doesn’t need Cohen’s cooperation, and Mueller wants to indict Cohen for part of the conspiracy, as well. And it’s possible that Mueller just doesn’t want to cooperate with Cohen because he’s been spending so much time talking to the press. We know that he—with George Papadopoulos, for example, as soon as Papadopoulos went to the press, he stopped trying to cooperate with Papadopoulos entirely. So, we don’t actually know.
What we do know is that, according to Trump’s own understanding of the circumstance, for whatever that’s worth, Paul Manafort is the one person who can bring him down. Now, Rick Gates has been cooperating since February, and Rick Gates knew most of what Paul Manafort knew, and Rick Gates is the only one of the many people that you said, that you described as who had already plead, who got a very sweet plea deal. I mean, he got excused from all of the financial crimes that Paul Manafort was found guilty of yesterday, some other ones in D.C. He was excused from some of his own role in the conspiracy with Russia. So, Rick Gates, as far as we know, is the one who’s offering the big cooperation. And that puts both Cohen and Paul Manafort on much shakier grounds if they believe they’re going to get a lesser sentence by cooperating with Mueller.
AMY GOODMAN: And who exactly is Lanny Davis? Which is very interesting. Michael Cohen has chosen him as his lawyer, the former Clinton legal adviser. That’s President Clinton in the 1990s, when he was president.
MARCY WHEELER: Right. But Lanny’s function here is not to be a lawyer. Cohen’s got a different lawyer, who used to work in Southern District of New York. That lawyer was picked because he knows the people who were prosecuting him in New York, and he has the ability, to the extent that it’s possible, to negotiate a plea deal. Lanny Davis’s job is to go on TV and make statements like he did yesterday. That’s really been his function for a long time now. He’s in some ways the Democratic equivalent of Paul Manafort. He’s about press these days, more than he is about lawyering.
But again, I’m not sure that working the press is going to get you a plea deal with Robert Mueller. He has made it very clear he doesn’t want any of this in the press. He doesn’t want to work via the press. He’s been unbelievably good at not leaking anything. And so, hiring a Democratic lawyer to go and appear on TV and make allegations about the president isn’t necessarily going to help Cohen’s legal plight at all.
AMY GOODMAN: And what about Burr and Warner, who are heading up the Senate committee that is investigating Russian interference, saying that this might influence, what Michael Cohen has said, might want to question him? And what this means, Michael Cohen going before Congress?
MARCY WHEELER: Right. So, Cohen already testified to the Senate Intelligence Committee. And there, he said he didn’t know of any prior knowledge of the June 9th meeting. And some of the public statements that he and Lanny Davis have made seem to contradict that. And so, yesterday, the Senate Intelligence Committee, in the wake of this plea deal, basically contacted his lawyers and said, “Does his prior testimony before the committee—does it still hold?” And they’ve threatened to call him back to test the claims that he’s made before.
You know, yeah, I’m a little bit jaded about what Richard Burr is doing here. The investigation, yes, it is credible. Yes, it is bipartisan. There are only seven people investigating it, according to public reports. They’re still working on reviewing what the Intelligence Committee knew by January 2017. So they’re not getting to the guts of whether there really was collusion. So it’s sort of Richard Burr’s job to go and test these claims, and go on TV and claim that there was no collusion, rather than to really get to the core of whether there was or not. And I think that’s more of what’s going on here than really trying to get to the bottom of things. But we will—because the Senate Intelligence Committee already got testimony from Michael Cohen, we will learn quickly whether he’s backing off his prior testimony because of yesterday’s move.
AMY GOODMAN: Right, and might want to get more testimony from him. But I’d like to turn to Democratic Senator Richard Blumenthal, who said in a statement on Tuesday that the White House is looking increasingly like a criminal enterprise. This is Blumenthal speaking on CNN with Wolf Blitzer last night.
SEN. RICHARD BLUMENTHAL: We’re in a Watergate moment, where the two parties have to come together. We need bipartisanship now more than ever, to protect the special counsel and to stop—and I must underscore stop—any consideration of pardons, which undoubtedly will be another—
WOLF BLITZER: President has a right to pardon Paul Manafort, for example, if he wanted to.
SEN. RICHARD BLUMENTHAL: He has the power to pardon Paul Manafort, but he would be screaming to the world, “I am guilty.” And he would so undermine the credibility of his office that it would be a disaster for the nation. And it would very possibly be an obstruction of justice, because he would be misusing that power to protect himself as a target of that investigation.AMY GOODMAN: So, that’s Senator Blumenthal speaking on CNN. Marcy Wheeler, the possibility of pardoning Manafort and Michael Cohen—and/or Michael Cohen?
MARCY WHEELER: Right, and Cohen, this morning, is already out saying he won’t take a pardon, which I doubt, but that’s what he’s saying, or Lanny Davis is saying on TV. Back in January or February, The New York Times actually reported that Trump had preemptively offered both Mike Flynn and Paul Manafort pardons. And a lot of what has happened in the Manafort case, you sort of have to believe that, because yesterday’s verdicts were not a surprise. The case was overwhelming against him. And so it was sort of suicidal for him to go through trial, because his sentence will be much stiffer—I mean, just as a comparison, as you said, he is expected to get at least 10 years, whereas Cohen is going to get five or fewer. Similar kinds of crimes, right? So, for having gone to trial, Manafort is going to get twice the sentence. And so, one of the most logical explanations for that is he’s expecting a pardon.
But because Mueller already knows—in fact, this is one of the questions that he wants to ask Trump, apparently—Mueller already knows that this pardon has been offered preemptively, I think that that would count as obstruction of justice. It’s also not that easy to do well. The last time we were in this kind of situation, George Bush commuted Scooter Libby’s sentence right when he was about to go to prison. And that meant that Libby wasn’t going to prison, but also still retained his Fifth Amendment privilege against testimony. That’s the kind of thing he would have to do with Manafort. And it’s not clear that that would be enough to silence Manafort going forward, because if he pardons Manafort today, then Manafort—depending on how broad the pardon is, then Manafort can be asked to testify, without incriminating himself, on the Russia stuff, which is what Trump has already said is what Manafort is most threatening to him for. So, it’s sort of hard to do. It’s unclear whether he will do—I mean, he’s pardoning everyone anyway, but it’s not clear that that’s going to achieve the objectives that he really wants, which is to skate free of what he himself has done with the conspiracy to win the election—
AMY GOODMAN: Well, Marcy—
MARCY WHEELER: —with multiple, now, we can say—
AMY GOODMAN: Go ahead. “We can say”?
MARCY WHEELER: Sorry—with multiple conspiracies. I mean, there’s the conspiracy to silence the women and the conspiracy to work with Russia to win the election. So now we can speak in multiple terms.
AMY GOODMAN: Trump’s current personal attorney, Rudy Giuliani, said in a statement, “There is no allegation of any wrongdoing against the President in the government’s charges against Mr. Cohen. It is clear that as the prosecutor noted Mr. Cohen’s actions reflect a pattern of lies and dishonesty over a significant period of time.” On Sunday, Giuliani appeared on Meet the Press with Chuck Todd to defend President Trump.
RUDY GIULIANI: What I have to tell you is, look, I’m not going to be rushed into having him testify so that he gets trapped into perjury. And when you tell me that, you know, he should testify because he’s going to tell the truth and he shouldn’t worry, well, that’s so silly, because it’s somebody’s version of the truth, not the truth. He didn’t have a conversation about—
CHUCK TODD: Truth is truth. I don’t mean to go like—
RUDY GIULIANI: No, it isn’t truth. Truth isn’t truth. The president of the United States says, “I didn’t”—
CHUCK TODD: “Truth isn’t truth”? Mr. Mayor, do you realize what—I mean—
RUDY GIULIANI: No, no, no. What—
CHUCK TODD: This is going to become a bad meme.
RUDY GIULIANI: Don’t—don’t do—don’t do—don’t do this to me.
CHUCK TODD: Don’t do “Truth isn’t truth” to me.
RUDY GIULIANI: Donald Trump—Donald Trump says, “I didn’t talk about Flynn with Comey.” Comey says, “You did talk about it.” So tell me what the truth is.AMY GOODMAN: Rudy Giuliani saying, “Truth is not truth.” But, Marcy Wheeler, I want to go a step further, to this issue of impeachment and what can happen here. We are so close, 11 weeks away from the midterm elections. Also, you know, Brett Kavanaugh, they’re trying to push him through before the election, the possibility of a flipping of the House or the Senate or the House and the Senate. But what about this possibility of impeachment?
MARCY WHEELER: Well, we don’t know. I mean, Rudy Giuliani, both of those clips are him playing games. Neither of those are credible. It’s not clear he even understands the legal risk that the president is under. He really should stop being invited on TV to go and just play with the press, because he’s not providing any news or anything credible. But Mueller knows that. Mueller knows that Rudy is playing games. Mueller knows that Rudy is trying to stall. Mueller knows that Rudy is trying to stall long enough to get Kavanaugh confirmed. And so we don’t know, and Mueller is not telling, what he plans to do in response.
One of the things that was interesting and less newsworthy yesterday is he extended the cooperation, the continuation of Mike Flynn’s sentencing, but only until September 17th, which is shorter than any of the other extensions, continuations. And so that suggests that Mueller has got some things up his sleeve in the next 24 days. And I wouldn’t be so surprised to expect some major moves from Mueller, while Rudy is on TV kind of playing with the press and uttering nonsense. So, we don’t know what’s going to happen. I’m sure Mueller recognizes the risk of the stall games that Rudy and Trump are trying to play. I guess we just wait to see how Mueller is going to respond to that.
AMY GOODMAN: Marcy, before we end, I wanted to ask you about your personal connection to the Mueller probe. Last month, you wrote, quote, “Sometime last year, I went to the FBI and provided information on a person whom I had come to believe had played a significant role in the Russian election attack on the US.” This led you to being a witness in special counsel Mueller’s investigation. Explain.
MARCY WHEELER: Sort of. I went to the FBI about something that was not part of the Mueller investigation. And as I understand it, it subsequently got moved under the Mueller investigation. So, yeah, I’ve got a little bit of insight into things that are not yet public about people unrelated to Trump. I did, in that post, note that the person in question knew what Trump was doing within 15 hours of the polls closing last year—or, in 2016, after the election. But beyond that, I can’t really explain what the person that I went to the FBI about did. It just—it does lead me to believe that there are a lot of things about the Mueller inquiry, or the things that are now under Mueller’s investigation, that people just aren’t aware of in public and that I think will surprise people.
AMY GOODMAN: And did you reveal your sources to him? Explain further what you did explain publicly.
MARCY WHEELER: I went and talked to the FBI about something that I believed this source had done, roles that I believed he had played in the election. And I did that—the way I did it was, in part, an effort to protect my other sources and to protect my readers, because I believed if I had not done that, the FBI would come and start getting call records for everyone who goes to my site. I went to them, and I said, “You can have this, but you can’t—you know, I’m not going to talk to you about any of my other sources or any other journalists or what have you.” So, it was sort of a preemptive effort to stop what I viewed as somebody doing ongoing damage, without impacting my other equities, I guess. So, we’ll see whether I made the right decision, but I—
AMY GOODMAN: So, originally, he was a source, and then you came to be—
MARCY WHEELER: Yeah.
AMY GOODMAN: —very concerned about him, and so told the FBI who he was.
MARCY WHEELER: Correct.
AMY GOODMAN: And he, you believe—what was it that he did, that you felt needed to be exposed?
MARCY WHEELER: Yeah, I’m not going to say that. I think it’ll—you know, it’ll become clear in the future. But it was just—it was clear at the time I made the decision to go to the FBI that he was engaged in ongoing serious damage and hurting other people, and hurting innocent people. So I felt like I could not stay silent about that any longer. But I also felt like I couldn’t go to the press. I couldn’t just publish it, because, in my understanding, that would probably exacerbate things. It would lead him to do something unreasonable, and it might lead to increasing the damage rather than decreasing it.
Wednesday
Trump’s Crony Capitalists Plot a New Heist
The Treasury secretary floats a plan to hand $100 billion in capital
gains tax savings to his moneyed friends. It’s almost certainly illegal.
By The Editorial Board
This may strike some as a depressingly cynical reading of what is being proposed. What, you thought their motives were pure?
By The Editorial Board
It seems that
last year’s $1.5 trillion tax-cut package, despite heavily favoring
affluent investors and corporate titans over workers of modest means,
was insufficiently generous to the wealthy to satisfy certain members of
the Trump administration. So now Treasury Secretary Steven Mnuchin
offers an exciting plan to award an additional $100 billion tax cut to the richest Americans.
Specifically,
Mr. Mnuchin has directed his department to explore allowing investors
to take inflation into account when calculating their capital gains tax
bill. (Instead of determining how much value a stock had gained by
subtracting its selling price from its original purchase price,
investors would first adjust the purchase price to reflect what it would
be in inflation-adjusted dollars.) Fans of the move argue that it would
benefit the wide swath of middle-class Americans who own stocks, along
with all those older Americans whose homes have appreciated in value
over the decades. And, indeed, many middle-class Americans could wind up
with a sliver of savings. But not all investors are equal.
Independent analyses say that a whopping 97 percent
of the savings from Mr. Mnuchin’s plan would go to the highest 10
percent of income earners. (For the severely math challenged, that would
leave a paltry 3 percent to be divvied up by the remaining 90 percent
of the country.) Two-thirds of all savings would go to the top 0.1 percent of income earners.
So
in rough dollar terms, the administration is looking to hand $66
billion-plus to the ultrarich like — just to name a few — Mr. Mnuchin,
who did very, very well during his years at Goldman Sachs (and already
has a net worth estimated at $252 million); Wilbur Ross, the loaded
secretary of commerce (estimated net worth: $506.5 million); Betsy
DeVos, the even richer secretary of education (about $1.1 billion); and,
of course, the extended Trump-Kushner clan. (To be sure, Ivanka Trump
could use a financial pick-me-up to help take the sting out of having to
close down her clothing brand.)
Thus die the final vestiges of this president’s pretty little narrative about being a populist hero.
Hard-core economic conservatives and anti-tax activists have long pushed to index capital gains taxes for inflation under the dubious argument that it would bolster the overall economy. Unsurprisingly,
this crusade has failed to catch fire in Congress, where even anti-tax
lawmakers can be skittish about so blatantly playing to the plutocrats.
But
here’s where Mr. Mnuchin’s plan is so politically inspired. He hopes to
cut Congress out of this deal altogether by declaring it a regulatory
matter and allowing Treasury to unilaterally redefine the term “cost.”
No need to subject this process to the messiness of the legislative
process when it is so much more efficient to claim jurisdiction for
oneself and change the meaning of words to suit one’s purpose. Behold
Trumpian logic at its purest.
One potential sticking point is that Mr. Mnuchin’s proposal may not be, strictly speaking, legal. Congress has never authorized
the Treasury Department to interpret tax law in the bizarre way the
secretary is advocating. And the last time such a possibility was
floated, in 1992, President George Bush’s Justice Department shot it
down with extreme prejudice. The department’s Office of Legal Counsel
went so far as to issue a 23-page opinion
laying out in excruciating detail why the Treasury Department does not
have the legal authority to index capital gains for inflation by means
of regulation.
So there’s that.
But
the Trump administration isn’t one to fret about legal niceties when
pursuing its pet projects. It much prefers to plow forward and let the
court challenges shake out as they will. You win some. (Think travel
ban, eventually, after multiple revisions.) You lose some. (Snatching
migrant kids from their families at the border.) But as the adage goes,
it’s easier to ask for forgiveness than permission.
Mr.
Mnuchin may well figure that the risk is worth the potential gain for
himself, his wealthy friends and, more broadly, members of the
Republican Party’s donor class who might very well show their gratitude
by channeling some of their tax savings into party coffers. Besides, a
case like this could take a while to wend its way through the courts,
and who knows how many millions could be saved in the meantime.
Beyond pure greed and a desire to suck
up to the 0.1 percent, it’s hard to see any real-world logic behind this
move. As political messaging goes, it seems flat-out bonkers to
position Republicans as the party of the superrich — especially during a
critical midterm election campaign with control of both houses of
Congress on the line.
But
at this point, President Trump may have decided that it doesn’t much
matter what economic policies he pursues so long as he can keep the base
distracted and fired up with his relentless culture warring. (Build the
wall! Lock her up! Gorsuch! Kavanaugh! Stand for the anthem or be
fired!) In early 2016, candidate Trump famously boasted that he “could
stand in the middle of Fifth Avenue and shoot somebody” and not lose any
voters. Since becoming president, he has been given little cause by his
base — or by Republicans in Congress — to doubt his political
infallibility. As such, with Mr. Mnuchin’s proposal, as with so many
other moves undertaken by this administration, Mr. Trump’s thinking may
boil down to little more than, “Why the heck not?”
Friday
Trump’s Business of Corruption
What secrets will Mueller find when he investigates the President’s foreign deals?
Several news accounts have confirmed that Mueller has indeed begun to examine Trump’s real-estate deals and other business dealings, including some that have no obvious link to Russia. But this is hardly wayward. It would be impossible to gain a full understanding of the various points of contact between the Kremlin and the Trump campaign without scrutinizing many of the deals that Trump has made in the past decade. Trump-branded buildings in Toronto and the SoHo neighborhood of Manhattan were developed in association with people who have connections to the Kremlin. Other real-estate partners of the Trump Organization—in Brazil, India, Indonesia, and elsewhere—are now caught up in corruption probes, and, collectively, they suggest that the company had a pattern of working with partners who exploited their proximity to political power.
One foreign deal, a stalled 2011 plan to build a Trump Tower in Batumi, a city on the Black Sea in the Republic of Georgia, has not received much journalistic attention. But the deal, for which Trump was reportedly paid a million dollars, involved unorthodox financial practices that several experts described to me as “red flags” for bank fraud and money laundering; moreover, it intertwined his company with a Kazakh oligarch who has direct links to Russia’s President, Vladimir Putin. As a result, Putin and his security services have access to information that could put them in a position to blackmail Trump. (Sekulow said that “the Georgia real-estate deal is something we would consider out of scope,” adding, “Georgia is not Russia.”)
The waterfront lot where the Trump Tower Batumi was supposed to be built remains empty. A groundbreaking ceremony was held five years ago, but no foundation has been dug. Trump removed his name from the project shortly before assuming the Presidency; the Trump Organization called this “normal housekeeping.” When the tower was announced, in March, 2011, it was the centerpiece of a bold plan to transform Batumi from a seedy port into a glamorous city. But the planned high-rise—forty-seven stories containing lavish residences, a casino, and expensive shops—was oddly ambitious for a town that had almost no luxury housing.
Trump did very little to develop the Batumi property. The project was a licensing deal from which he made a quick profit. In exchange for the million-dollar payment, he granted the right to use his name, and he agreed to visit Georgia for an elaborate publicity campaign, which was designed to promote Georgia’s President at the time, Mikheil Saakashvili, as a business-oriented reformer who could attract Western financiers. The campaign was misleading: the Trump Tower Batumi was going to be funded not by Trump but by businesses with ties to Kazakh oligarchs, including Timur Kulibayev, the son-in-law of Kazakhstan’s autocratic ruler, Nursultan Nazarbayev, and a close ally of Putin.
Kazakhstan has the largest economy in Central Asia, based on its vast reserves of oil and metals, among other natural resources. Kazakhstan is notoriously corrupt, and much of its wealth is in the hands of Nazarbayev’s extended family and his favored associates.
Trump visited Georgia in April, 2012, at a politically vulnerable time for Saakashvili. Nine years earlier, Saakashvili had led the Rose Revolution, which overturned the country’s autocratic post-Soviet leadership. After assuming power, he initially cracked down on widespread petty corruption and cleaned up the civil service, which had functioned largely on bribes. Then, in 2008, he led a disastrous war against Russia over control of the breakaway region of South Ossetia. By then, his fight against corruption had largely ceased, and Transparency International and other N.G.O.s were reporting that élite corruption—in which wealthy, politically connected people receive better treatment from courts, prosecutors, and government administrators—was rampant in Georgia. Under these conditions, few Western investors or brands were willing to put money into the country. Saakashvili himself was increasingly unpopular, and the Trump deal was meant to help salvage his reputation.
Saakashvili showed Trump around Tbilisi, the capital, and Batumi. Georgian television covered the events fawningly, promising viewers that Trump would soon build a second tower, in Tbilisi. One broadcaster proclaimed that Trump was the world’s top developer. At the groundbreaking ceremony in Batumi, Saakashvili said that the tower was “a big deal . . . that changes everything around here.” At another event, beneath a banner that proclaimed “trump invests in georgia,” he thanked Trump for being part of the project—which, he said, had a budget of two hundred and fifty million dollars. He also awarded Trump the Georgian Order of Brilliance. Trump, in turn, praised Saakashvili.
“Everybody in the world, they speak of Georgia and the great miracle that’s taking place,” he said.
Upon returning home, Trump appeared on “Fox and Friends.” Gretchen Carlson, the host at the time, asked him, “What are you going to be investing in?” He responded, “I’m doing a big development there—and it’s been amazing.” He said of Saakashvili, “He’s one of the great leaders of the world.”
Virtually none of the things that Saakashvili and Trump said about the deal were true. The budget of the Trump Tower Batumi was not two hundred and fifty million dollars but a hundred and ten. Trump, meanwhile, could hardly have invested such a sum himself. He professed to be a billionaire, but a few months earlier an appeals court in New Jersey had shut down Trump’s legal campaign against Timothy O’Brien, the author of “TrumpNation,” which argued that Trump had wildly inflated his fortune, and was actually worth less than a quarter of a billion dollars. Julie George, a political scientist at Queens College who studies Georgia, told me that, by 2012, Saakashvili’s tenure could in no way be considered a “great miracle.” The country’s economy was floundering, and shortly after Trump’s visit it was revealed that the government had been torturing political opponents. (Saakashvili did not respond to requests for comment.)
The announcement of the Batumi tower was handled with cynical opportunism by both Trump and Saakashvili, but that was not the deal’s biggest problem. The developer that had paid Trump and invited him to Georgia—a holding company known as the Silk Road Group—had been funded by a bank that was enmeshed in a giant money-laundering scandal. And Trump, it seemed, had not asked many questions before taking the money.
Before
the collapse of the Soviet Union, in 1991, Batumi had been a popular
resort town, but by the early aughts it had fallen into disrepair. Its
beachfront hotels housed refugees from the nearby Abkhazia region, which
had broken away from Georgia in 1992. Batumi was the capital of the
semiautonomous Adjara region, which was itself on the verge of declaring
independence. Saakashvili saw the redevelopment of Batumi as critical
for maintaining Georgian sovereignty there. Batumi residents promised to
turn the city into the Monaco of the Black Sea.
But nobody seemed willing to put money into Batumi. Levan Varshalomidze, the governor of Adjara at the time, told me that Saakashvili and other Georgian officials sought financial backers, but they could not get anyone to invest in a run-down Georgian port.
Then, in 2005, something remarkable happened. Saakashvili and President Nazarbayev, of neighboring Kazakhstan, announced that B.T.A. Bank—the largest bank in Kazakhstan—was giving several hundred million dollars in loans to help develop Georgia. The loans would pay for the construction of hotels in Batumi, the expansion of the Georgian telecommunications industry, and the growth of a Georgian bank. Curiously, all the loans went to subsidiaries of one company: the Silk Road Group, which specialized not in real-estate development but in shipping crude- and refined-oil products, by rail, from Kazakhstan to other countries. Its senior executives had very little experience in telecommunications, banking, or hospitality. The Silk Road Group, which had annual revenues of roughly two hundred million dollars, was planning, in an instant, to venture into several new industries. Compounding the risk, this expansion involved taking on a debt one and a half times its annual revenue.
That wasn’t the only puzzling thing about the loans. At the time that B.T.A. was lending all this money to the Silk Road Group, the bank’s deputy chairman, Yerkin Tatishev, was apparently crossing an ethical line—positioning himself to exert improper influence over some of the very Silk Road Group subsidiaries that were benefitting from the loans. B.T.A. Bank had representatives on the boards of those subsidiaries, but one representative serving on two boards, Talgat Turumbayev, was simultaneously working for Tatishev’s company, the Kusto Group, supervising mergers and acquisitions. (Turumbayev told me that serving on the boards wasn’t a conflict of interest, because it didn’t take “a lot of time.”)
I spoke with people who had knowledge about the subsidiaries. They told me that the subsidiaries were co-owned by the Silk Road Group and secret partners. The source at one subsidiary told me he suspected that Tatishev—who repeatedly participated in company meetings—was a hidden owner.
Tatishev, who is estimated by Forbes to be worth half a billion dollars, left B.T.A. Bank in 2009. He insisted to me that, while he was there, he had no personal financial involvement in the Silk Road Group. But he acknowledged that he “developed a strong friendship” with George Ramishvili, the company’s C.E.O., and “offered to advise him.” He added, “It was the right thing to do, and this is my definition of friendship.” But is it true that Tatishev merely advised the Silk Road Group? The Web site of Tatishev’s company, the Kusto Group, declares that it has been “an outstanding partner for the Silk Road Group” since 2006, noting, “Together we have successfully invested in various sectors of the Georgian economy.” Whenever I pointed out such contradictions to Tatishev, he came up with new answers. In an e-mail, he said that the joint investments were simply “charity/heritage projects.” After he told me that he never served on the committee of B.T.A. Bank that oversees lending, I checked, and confirmed that this was false. He then insisted that he “did not recall” participating.
If, as the Web site suggests, Tatishev financially involved himself in businesses funded by the B.T.A. Bank loans, then he and the Silk Road Group may well have committed bank fraud. When bank executives have a personal financial stake in projects that their own bank is financing, it is known as “self-dealing,” and it is a crime in nearly every country, including Kazakhstan. I recently spoke with Sergei Gretsky, a professor at the Catholic University of America, who wrote his Ph.D. dissertation on the Kazakh banking sector. When I asked him if it would be illegal for the deputy chairman of a Kazakh bank to have personal investments in a project that his bank was funding and withhold that information from investors, he laughed and said, “Yes, of course.”
Richard Gordon, the director of the financial-integrity unit at Case Western Reserve University School of Law, explained that self-dealing represented a central cause of the 1997 global financial crisis. Banks in Indonesia, South Korea, Brazil, Russia, Pakistan, and Taiwan failed, in part, because bank executives and board members kept lending money to themselves and to their cronies. “This leads to defaults, bank bankruptcies, or government bailouts,” he said. Since then, nearly every nation has made efforts to prevent self-dealing. Gordon said that, at most banks today, the board members and senior staff don’t even have a credit card associated with the bank, in order to eliminate any appearance of a conflict of interest.
Lending to companies in which a senior bank executive has a personal stake is a crime because it violates the central trust that makes banking possible. The fundamental business of banking is to borrow money from one group and lend it to another. B.T.A., which had been heralded internationally as a fast-growing bank in a troubled part of the world, had raised money by selling bonds through J. P. Morgan, Credit Suisse, and many other top Western banks. If these Western banks had known that a senior B.T.A. official was heavily involved in the operations of a company that was receiving huge loans from B.T.A., they might have balked.
But nobody seemed willing to put money into Batumi. Levan Varshalomidze, the governor of Adjara at the time, told me that Saakashvili and other Georgian officials sought financial backers, but they could not get anyone to invest in a run-down Georgian port.
Then, in 2005, something remarkable happened. Saakashvili and President Nazarbayev, of neighboring Kazakhstan, announced that B.T.A. Bank—the largest bank in Kazakhstan—was giving several hundred million dollars in loans to help develop Georgia. The loans would pay for the construction of hotels in Batumi, the expansion of the Georgian telecommunications industry, and the growth of a Georgian bank. Curiously, all the loans went to subsidiaries of one company: the Silk Road Group, which specialized not in real-estate development but in shipping crude- and refined-oil products, by rail, from Kazakhstan to other countries. Its senior executives had very little experience in telecommunications, banking, or hospitality. The Silk Road Group, which had annual revenues of roughly two hundred million dollars, was planning, in an instant, to venture into several new industries. Compounding the risk, this expansion involved taking on a debt one and a half times its annual revenue.
That wasn’t the only puzzling thing about the loans. At the time that B.T.A. was lending all this money to the Silk Road Group, the bank’s deputy chairman, Yerkin Tatishev, was apparently crossing an ethical line—positioning himself to exert improper influence over some of the very Silk Road Group subsidiaries that were benefitting from the loans. B.T.A. Bank had representatives on the boards of those subsidiaries, but one representative serving on two boards, Talgat Turumbayev, was simultaneously working for Tatishev’s company, the Kusto Group, supervising mergers and acquisitions. (Turumbayev told me that serving on the boards wasn’t a conflict of interest, because it didn’t take “a lot of time.”)
I spoke with people who had knowledge about the subsidiaries. They told me that the subsidiaries were co-owned by the Silk Road Group and secret partners. The source at one subsidiary told me he suspected that Tatishev—who repeatedly participated in company meetings—was a hidden owner.
Tatishev, who is estimated by Forbes to be worth half a billion dollars, left B.T.A. Bank in 2009. He insisted to me that, while he was there, he had no personal financial involvement in the Silk Road Group. But he acknowledged that he “developed a strong friendship” with George Ramishvili, the company’s C.E.O., and “offered to advise him.” He added, “It was the right thing to do, and this is my definition of friendship.” But is it true that Tatishev merely advised the Silk Road Group? The Web site of Tatishev’s company, the Kusto Group, declares that it has been “an outstanding partner for the Silk Road Group” since 2006, noting, “Together we have successfully invested in various sectors of the Georgian economy.” Whenever I pointed out such contradictions to Tatishev, he came up with new answers. In an e-mail, he said that the joint investments were simply “charity/heritage projects.” After he told me that he never served on the committee of B.T.A. Bank that oversees lending, I checked, and confirmed that this was false. He then insisted that he “did not recall” participating.
If, as the Web site suggests, Tatishev financially involved himself in businesses funded by the B.T.A. Bank loans, then he and the Silk Road Group may well have committed bank fraud. When bank executives have a personal financial stake in projects that their own bank is financing, it is known as “self-dealing,” and it is a crime in nearly every country, including Kazakhstan. I recently spoke with Sergei Gretsky, a professor at the Catholic University of America, who wrote his Ph.D. dissertation on the Kazakh banking sector. When I asked him if it would be illegal for the deputy chairman of a Kazakh bank to have personal investments in a project that his bank was funding and withhold that information from investors, he laughed and said, “Yes, of course.”
Richard Gordon, the director of the financial-integrity unit at Case Western Reserve University School of Law, explained that self-dealing represented a central cause of the 1997 global financial crisis. Banks in Indonesia, South Korea, Brazil, Russia, Pakistan, and Taiwan failed, in part, because bank executives and board members kept lending money to themselves and to their cronies. “This leads to defaults, bank bankruptcies, or government bailouts,” he said. Since then, nearly every nation has made efforts to prevent self-dealing. Gordon said that, at most banks today, the board members and senior staff don’t even have a credit card associated with the bank, in order to eliminate any appearance of a conflict of interest.
Lending to companies in which a senior bank executive has a personal stake is a crime because it violates the central trust that makes banking possible. The fundamental business of banking is to borrow money from one group and lend it to another. B.T.A., which had been heralded internationally as a fast-growing bank in a troubled part of the world, had raised money by selling bonds through J. P. Morgan, Credit Suisse, and many other top Western banks. If these Western banks had known that a senior B.T.A. official was heavily involved in the operations of a company that was receiving huge loans from B.T.A., they might have balked.
In
the years before the Trump Tower Batumi deal, B.T.A. Bank became
entangled in a spectacular crime. Mukhtar Ablyazov, the bank’s chairman,
was a prominent figure in Kazakhstan, and not just because he was a
billionaire. He was one of the leading sponsors of a political party
opposed to President Nazarbayev. In 2009, when Nazarbayev signalled a
desire to seize control of B.T.A. Bank, Ablyazov fled the country for
London—taking billions of dollars in bank funds with him. He
accomplished this with a diffuse scheme: dozens of offshore companies
under his control received loans from B.T.A., and none of the loans were
paid back.
In 2010, when a Trump Organization executive, Michael Cohen, began negotiating with the Silk Road Group about licensing Trump’s name for the Batumi tower, Ablyazov was facing eleven lawsuits in the U.K. The Kazakh government, which had indeed seized control of B.T.A. Bank, had sued him to reclaim ten billion dollars that he had allegedly siphoned out of the country. The Financial Times covered the case extensively, as did the Times, which described “a scheme by B.T.A.’s former chairman, Mukhtar Ablyazov, to direct between $8 billion and $12 billion worth of B.T.A. loans—about half of the bank’s loan book—to companies that he secretly controlled.” The article noted that Ablyazov was renting “a 15,000-square-foot mansion” in London.
It would have taken only a Google search for the Trump Organization to discover that the Silk Road Group had received much of its funding from B.T.A. Bank, which, at the time of the Batumi deal, was mired in one of the largest fraud cases in recent history. The Silk Road Group had even been business partners with the central figure in the scandal: Ablyazov and the Silk Road Group were two of the owners of a bank in Georgia. I asked Cohen, who visited Georgia with Trump, if he had been concerned about the Silk Road Group’s connection to B.T.A. Bank. “I didn’t even know that B.T.A.
was involved in this entire scenario up until the moment you told me,” he said. He added that he was not aware of any information about how the tower would be funded—or even “if there was going to be any funding at all.” He went on, “We had not gotten to that stage of the process. Remember, this was a licensing deal. The financing of the project was the responsibility of the licensee”—the Silk Road Group.
I recently spoke with John Madinger, a retired U.S. Treasury official and I.R.S. special agent, who used to investigate financial crimes. He is the author of “Money Laundering: A Guide for Criminal Investigators.” When I told him what Cohen had said to me, he responded, “No, no, no! You’ve got to do your due diligence. You shouldn’t do a financial transaction with funds that appear to stem from unlawful activity. That’s like saying, ‘I don’t care if Pablo Escobar is my secret business partner.’ You have to care—otherwise, you’re at risk of violating laws against money laundering.”
A judge in the U.K. ruled repeatedly against Ablyazov, starting in 2009, and ordered him to hand over more than four billion dollars to B.T.A. (The Kazakh government insisted that six billion dollars more remained missing.) The judge, Sir Nigel John Martin Teare, said that Ablyazov’s use of offshore holding companies had facilitated “fraud on an epic scale.” Teare ruled that “there can be only one explanation for the fact that the very large sums of money which were advanced were immediately transferred to companies owned or controlled by Mr. Ablyazov, namely, that the original loans were part of a dishonest scheme whereby Mr. Ablyazov sought to misappropriate monies which belonged to the bank.” Ablyazov was eventually sentenced to twenty-two months in a U.K. prison, for contempt of court, because he had refused to reveal disputed assets. In February, 2012, when Trump was planning his trip to Georgia, Ablyazov fled to France. He is currently fighting extradition.
In 2010, when a Trump Organization executive, Michael Cohen, began negotiating with the Silk Road Group about licensing Trump’s name for the Batumi tower, Ablyazov was facing eleven lawsuits in the U.K. The Kazakh government, which had indeed seized control of B.T.A. Bank, had sued him to reclaim ten billion dollars that he had allegedly siphoned out of the country. The Financial Times covered the case extensively, as did the Times, which described “a scheme by B.T.A.’s former chairman, Mukhtar Ablyazov, to direct between $8 billion and $12 billion worth of B.T.A. loans—about half of the bank’s loan book—to companies that he secretly controlled.” The article noted that Ablyazov was renting “a 15,000-square-foot mansion” in London.
It would have taken only a Google search for the Trump Organization to discover that the Silk Road Group had received much of its funding from B.T.A. Bank, which, at the time of the Batumi deal, was mired in one of the largest fraud cases in recent history. The Silk Road Group had even been business partners with the central figure in the scandal: Ablyazov and the Silk Road Group were two of the owners of a bank in Georgia. I asked Cohen, who visited Georgia with Trump, if he had been concerned about the Silk Road Group’s connection to B.T.A. Bank. “I didn’t even know that B.T.A.
was involved in this entire scenario up until the moment you told me,” he said. He added that he was not aware of any information about how the tower would be funded—or even “if there was going to be any funding at all.” He went on, “We had not gotten to that stage of the process. Remember, this was a licensing deal. The financing of the project was the responsibility of the licensee”—the Silk Road Group.
I recently spoke with John Madinger, a retired U.S. Treasury official and I.R.S. special agent, who used to investigate financial crimes. He is the author of “Money Laundering: A Guide for Criminal Investigators.” When I told him what Cohen had said to me, he responded, “No, no, no! You’ve got to do your due diligence. You shouldn’t do a financial transaction with funds that appear to stem from unlawful activity. That’s like saying, ‘I don’t care if Pablo Escobar is my secret business partner.’ You have to care—otherwise, you’re at risk of violating laws against money laundering.”
A judge in the U.K. ruled repeatedly against Ablyazov, starting in 2009, and ordered him to hand over more than four billion dollars to B.T.A. (The Kazakh government insisted that six billion dollars more remained missing.) The judge, Sir Nigel John Martin Teare, said that Ablyazov’s use of offshore holding companies had facilitated “fraud on an epic scale.” Teare ruled that “there can be only one explanation for the fact that the very large sums of money which were advanced were immediately transferred to companies owned or controlled by Mr. Ablyazov, namely, that the original loans were part of a dishonest scheme whereby Mr. Ablyazov sought to misappropriate monies which belonged to the bank.” Ablyazov was eventually sentenced to twenty-two months in a U.K. prison, for contempt of court, because he had refused to reveal disputed assets. In February, 2012, when Trump was planning his trip to Georgia, Ablyazov fled to France. He is currently fighting extradition.
The
Silk Road Group, which was established in Georgia shortly after the
fall of the Soviet Union, does not have a conventional corporate
structure. It is a holding company that controls dozens of corporate
entities registered around the world. In total, B.T.A. loaned the Silk
Road Group three hundred million dollars, and these funds were dispersed
among its many subsidiaries, making the money trail hard to follow. For
example, an eight-million-dollar loan was granted to Batumi Riviera
Holding, B.V., which was registered in Holland. Batumi Riviera Holding
has reported having a sole asset: a company called Vento, L.L.C., which
is registered in Georgia. That registration indicates that its creditor
is B.T.A., which made loans valued at seventy-five per cent of the
initial investment in the company. Batumi Riviera Holding, in turn, is
owned by Tbilisi Central Plaza, a company registered in Malta. Tbilisi
Central Plaza is owned by Susalike Holding GmbH, which is registered, in
Germany, to a Silk Road Group subsidiary.
Giorgi Rtskhiladze co-owns the Silk Road Transatlantic Alliance, a subsidiary that focusses on business deals involving the U.S. He brokered the Trump relationship. The Silk Road Group’s leadership in Georgia asked him to represent the company in interviews for this article. I recently met him at the St. Regis hotel in New York. When I asked why the Silk Road Group had such a bewildering structure, Rtskhiladze said, “There are tax reasons, and there are other reasons. To reduce liabilities, if we were sued or have to sue, certain courts are more efficient.” He pointed out that many companies legitimately use offshore jurisdictions to register their firms.
“That’s true,” Richard Gordon, the financial-integrity expert at Case Western, said. However, he added, “it is difficult to conceive of legitimate reasons for one shell company in an offshore jurisdiction to own a chain of companies established in a series of other offshore jurisdictions.” Such byzantine arrangements add expense, complexity, and uncertainty—the opposite of what businesses normally want—without providing any clear benefit, other than obfuscation. Moreover, by registering in so many different jurisdictions, the Silk Road Group has actually increased its legal risk, because a potential claimant can sue the company in all those jurisdictions. Gordon, who helped write the Republic of Georgia’s tax law, told me that he could think of no reason that this structure would help a Georgian company lawfully pay fewer taxes.
When I described to John Madinger, the retired Treasury official, the various entities and transactions involved in the funding of the Trump Tower Batumi, he said, “That is what you would expect to see in a money-laundering operation: multiple shell companies in multiple countries. It’s designed to make life hard for people trying to follow the transaction.”
It was difficult to pierce the veil of ownership, but I made some headway by collaborating on a reporting project with an investigations team at the Columbia University School of Journalism. Manuela Andreoni and Inti Pacheco, two recent graduates who are now investigative fellows, have spent months researching the Silk Road Group, Mukhtar Ablyazov, Yerkin Tatishev, and B.T.A. Bank. They have looked closely at relevant lawsuits, and they have obtained and translated property records and corporate registries from around the world.
Although Tatishev had repeatedly assured me that he was not involved in making decisions about Silk Road Group projects that had been funded by B.T.A. loans, I continued to accrue contradictory evidence. I recently received a cache of internal Silk Road Group e-mails, dating back to 2014, and they make clear that Tatishev has exerted detailed operational control over the company’s activities, including real-estate businesses that were funded by the B.T.A. loans. The e-mail cache shows that David Borger, a German financier who is a top executive at the company, regularly informed Tatishev about delicate internal financial matters and asked him for approval on a wide variety of decisions pertaining to Silk Road Group hotels, casinos, telecommunications infrastructure, and hydroelectric plants. Many of these projects had been initially funded by loans made while Tatishev was a senior official at B.T.A. Bank.
In one e-mail exchange, from earlier this year, Tatishev weighed in on a decision about which investment bank the Silk Road Group should use for a transaction. “We are cool guys,” Tatishev wrote. “And should always work with cool guys.” Borger responded, “Dear Yerkin, in this case can you please help us to get a cool deal with them?” He then asked Tatishev to describe how he wanted the deal to be structured.
In another recent e-mail discussion, which touched on crucial questions about the ownership and the financing of a major Silk Road Group project, Borger told Tatishev, “I need your ok.” In a subsequent e-mail, George Ramishvili, the C.E.O. of the Silk Road Group, added that Tatishev needed to give his approval. Tatishev did so. In a 2014 e-mail, a Silk Road Group consultant sent Tatishev and Ramishvili a summary of a plan they had devised to settle the outstanding debt owed to B.T.A. Bank.
Video from Trump’s visit to Georgia provides further evidence that Tatishev was a key part of the Silk Road Group—and suggests that Trump recognized his importance. During a speech that Trump gave in Tbilisi, Tatishev can be seen sitting in the audience next to Ramishvili. Trump says, “We have two great partners.” He points toward the seats where Tatishev and Ramishvili are sitting. “And they’re going to do a fantastic job.” (Giorgi Rtskhiladze, the Silk Road Transatlantic Alliance executive who met me in Manhattan, told me that Trump must have thought it was him, not Tatishev, sitting next to Ramishvili. But Rtskhiladze and Tatishev look nothing alike: Rtskhiladze is clean-shaven, with light-colored hair; Tatishev is nearly bald, with dark facial hair.) Tatishev accompanied Trump to meet Saakashvili at the Presidential Palace, in Tbilisi. When Michael Cohen, the Trump Organization executive, went to Georgia in 2010 to discuss building a tower with the Silk Road Group, he also met with Tatishev. A representative of the Silk Road Group said that Tatishev is a friend of Ramishvili and simply wanted to say hello to a big American tycoon. Inviting friends to important business meetings, the representative said, is common practice in the Caucasus region.
Giorgi Rtskhiladze co-owns the Silk Road Transatlantic Alliance, a subsidiary that focusses on business deals involving the U.S. He brokered the Trump relationship. The Silk Road Group’s leadership in Georgia asked him to represent the company in interviews for this article. I recently met him at the St. Regis hotel in New York. When I asked why the Silk Road Group had such a bewildering structure, Rtskhiladze said, “There are tax reasons, and there are other reasons. To reduce liabilities, if we were sued or have to sue, certain courts are more efficient.” He pointed out that many companies legitimately use offshore jurisdictions to register their firms.
“That’s true,” Richard Gordon, the financial-integrity expert at Case Western, said. However, he added, “it is difficult to conceive of legitimate reasons for one shell company in an offshore jurisdiction to own a chain of companies established in a series of other offshore jurisdictions.” Such byzantine arrangements add expense, complexity, and uncertainty—the opposite of what businesses normally want—without providing any clear benefit, other than obfuscation. Moreover, by registering in so many different jurisdictions, the Silk Road Group has actually increased its legal risk, because a potential claimant can sue the company in all those jurisdictions. Gordon, who helped write the Republic of Georgia’s tax law, told me that he could think of no reason that this structure would help a Georgian company lawfully pay fewer taxes.
When I described to John Madinger, the retired Treasury official, the various entities and transactions involved in the funding of the Trump Tower Batumi, he said, “That is what you would expect to see in a money-laundering operation: multiple shell companies in multiple countries. It’s designed to make life hard for people trying to follow the transaction.”
It was difficult to pierce the veil of ownership, but I made some headway by collaborating on a reporting project with an investigations team at the Columbia University School of Journalism. Manuela Andreoni and Inti Pacheco, two recent graduates who are now investigative fellows, have spent months researching the Silk Road Group, Mukhtar Ablyazov, Yerkin Tatishev, and B.T.A. Bank. They have looked closely at relevant lawsuits, and they have obtained and translated property records and corporate registries from around the world.
Although Tatishev had repeatedly assured me that he was not involved in making decisions about Silk Road Group projects that had been funded by B.T.A. loans, I continued to accrue contradictory evidence. I recently received a cache of internal Silk Road Group e-mails, dating back to 2014, and they make clear that Tatishev has exerted detailed operational control over the company’s activities, including real-estate businesses that were funded by the B.T.A. loans. The e-mail cache shows that David Borger, a German financier who is a top executive at the company, regularly informed Tatishev about delicate internal financial matters and asked him for approval on a wide variety of decisions pertaining to Silk Road Group hotels, casinos, telecommunications infrastructure, and hydroelectric plants. Many of these projects had been initially funded by loans made while Tatishev was a senior official at B.T.A. Bank.
In one e-mail exchange, from earlier this year, Tatishev weighed in on a decision about which investment bank the Silk Road Group should use for a transaction. “We are cool guys,” Tatishev wrote. “And should always work with cool guys.” Borger responded, “Dear Yerkin, in this case can you please help us to get a cool deal with them?” He then asked Tatishev to describe how he wanted the deal to be structured.
In another recent e-mail discussion, which touched on crucial questions about the ownership and the financing of a major Silk Road Group project, Borger told Tatishev, “I need your ok.” In a subsequent e-mail, George Ramishvili, the C.E.O. of the Silk Road Group, added that Tatishev needed to give his approval. Tatishev did so. In a 2014 e-mail, a Silk Road Group consultant sent Tatishev and Ramishvili a summary of a plan they had devised to settle the outstanding debt owed to B.T.A. Bank.
Video from Trump’s visit to Georgia provides further evidence that Tatishev was a key part of the Silk Road Group—and suggests that Trump recognized his importance. During a speech that Trump gave in Tbilisi, Tatishev can be seen sitting in the audience next to Ramishvili. Trump says, “We have two great partners.” He points toward the seats where Tatishev and Ramishvili are sitting. “And they’re going to do a fantastic job.” (Giorgi Rtskhiladze, the Silk Road Transatlantic Alliance executive who met me in Manhattan, told me that Trump must have thought it was him, not Tatishev, sitting next to Ramishvili. But Rtskhiladze and Tatishev look nothing alike: Rtskhiladze is clean-shaven, with light-colored hair; Tatishev is nearly bald, with dark facial hair.) Tatishev accompanied Trump to meet Saakashvili at the Presidential Palace, in Tbilisi. When Michael Cohen, the Trump Organization executive, went to Georgia in 2010 to discuss building a tower with the Silk Road Group, he also met with Tatishev. A representative of the Silk Road Group said that Tatishev is a friend of Ramishvili and simply wanted to say hello to a big American tycoon. Inviting friends to important business meetings, the representative said, is common practice in the Caucasus region.
With
minimal due diligence, Trump Organization executives would have noticed
that the Silk Road Group exhibited many warning signs of financial
fraud: its layered and often hidden ownership, its ornate use of shell
companies, its close relationship with a bank that was embroiled in a
financial scandal. Trump’s visit to Georgia occurred while his company
was making a series of similar foreign deals. Until then, the Trump
Organization had ventured abroad only occasionally: in 1999, a set of
Korean buildings licensed the Trump name; in 2006, Trump bought a golf
course in Scotland; the following year, construction began on a
Trump-branded tower in Turkey.
But by 2012 Trump was struggling in the U.S. market. His biggest investment, in American casinos, had proved ruinous, and he was now a minority owner of a near-bankrupt business. Trump had defaulted on loans multiple times, and nearly every bank in the U.S. refused to finance deals bearing his name. And so Trump turned to people in other countries who did not share this reluctance to give him money. In 2012 alone, the Trump Organization negotiated or finalized deals in Azerbaijan, Brazil, Canada, Georgia, India, the Philippines, the United Arab Emirates, and Uruguay.
At the time, the Trump Organization had only a handful of staff members involved in dealmaking. His children Ivanka Trump and Donald Trump, Jr., assumed a management role in many of these foreign projects. According to Rtskhiladze, Trump, Jr., helped oversee the Batumi deal. At one point, Rtskhiladze and Cohen held two days of meetings in New York to discuss the project. Trump, Jr., dropped by several times. According to former executives at the Trump Organization, the company lacked rigorous procedures for assessing foreign partners.
A month after Trump visited Georgia, he agreed to license his name to, and provide oversight of, a luxury hotel in Baku, Azerbaijan, a deal that I examined in an article in The New Yorker earlier this year. Trump received several million dollars from the brother and the son of an Azerbaijani billionaire who was then the Minister of Transportation—a man who, U.S. officials believe, may have been simultaneously laundering money for the Iranian Revolutionary Guard. In 2013, Trump met with the Azerbaijani-Russian billionaire Aras Agalarov and his son, Emin; that November, they partnered with Trump on the Miss Universe contest, in Moscow, and discussed building a Trump Tower in the Russian capital. In June, 2016, at Emin Agalarov’s request, Trump, Jr., met with Natalia Veselnitskaya, a lawyer who has represented Russian intelligence. Trump, Jr., was promised damaging information about Hillary Clinton. Veselnitskaya came to the meeting accompanied by business associates who have extensive ties to Georgia and Azerbaijan.
But by 2012 Trump was struggling in the U.S. market. His biggest investment, in American casinos, had proved ruinous, and he was now a minority owner of a near-bankrupt business. Trump had defaulted on loans multiple times, and nearly every bank in the U.S. refused to finance deals bearing his name. And so Trump turned to people in other countries who did not share this reluctance to give him money. In 2012 alone, the Trump Organization negotiated or finalized deals in Azerbaijan, Brazil, Canada, Georgia, India, the Philippines, the United Arab Emirates, and Uruguay.
At the time, the Trump Organization had only a handful of staff members involved in dealmaking. His children Ivanka Trump and Donald Trump, Jr., assumed a management role in many of these foreign projects. According to Rtskhiladze, Trump, Jr., helped oversee the Batumi deal. At one point, Rtskhiladze and Cohen held two days of meetings in New York to discuss the project. Trump, Jr., dropped by several times. According to former executives at the Trump Organization, the company lacked rigorous procedures for assessing foreign partners.
A month after Trump visited Georgia, he agreed to license his name to, and provide oversight of, a luxury hotel in Baku, Azerbaijan, a deal that I examined in an article in The New Yorker earlier this year. Trump received several million dollars from the brother and the son of an Azerbaijani billionaire who was then the Minister of Transportation—a man who, U.S. officials believe, may have been simultaneously laundering money for the Iranian Revolutionary Guard. In 2013, Trump met with the Azerbaijani-Russian billionaire Aras Agalarov and his son, Emin; that November, they partnered with Trump on the Miss Universe contest, in Moscow, and discussed building a Trump Tower in the Russian capital. In June, 2016, at Emin Agalarov’s request, Trump, Jr., met with Natalia Veselnitskaya, a lawyer who has represented Russian intelligence. Trump, Jr., was promised damaging information about Hillary Clinton. Veselnitskaya came to the meeting accompanied by business associates who have extensive ties to Georgia and Azerbaijan.
In
December, 2012, not long after Trump signed the Batumi licensing deal, a
company called Riviera, L.L.C., bought the fifteen-acre parcel of land
on which the Trump Tower Batumi would supposedly be built. The price was
twelve million dollars, and the seller was Vento, L.L.C., which was
owned by a company that was owned by a company that was owned by a
company that was owned by the Silk Road Group. Riviera, L.L.C., was also
partly owned by the Silk Road Group. In other words, the Silk Road
Group was selling property to itself.
The Financial Action Task Force, headquartered in Paris, is led by representatives from thirty-seven nations. In 2007, the task force issued a report about the use of real-estate projects for money laundering. The report makes note of several red flags. It warns of “complex loans” in which businesses “lend themselves money, creating the appearance that the funds are legitimate.” It also warns of the use of offshore shell companies and tangled corporate legal structures, especially those in which third parties are hired to administer a company and conceal its true ownership. These intertwined companies can then trade property among themselves, in order to create inflated valuations: “An often-used structure is, for example, the setting up of shell companies to buy real estate. Shortly after acquiring the properties, the companies are voluntarily wound up, and the criminals then repurchase the property at a price considerably above the original purchase price. This enables them to insert a sum of money into the financial system equal to the original purchase price plus the capital gain, thereby allowing them to conceal the origin of their funds.”
The report states that money launderers often find that “buying a hotel, a restaurant or other similar investment offers further advantages, as it brings with it a business activity in which there is extensive use of cash.” Casinos—like the one planned for the Trump Tower Batumi—are especially useful in this regard. The casino was to be owned by the Silk Road Group and its partners.
Alan Garten, the chief legal officer for the Trump Organization, declined to describe the due diligence behind the Batumi tower. When the deal was signed, the general counsel for the Trump Organization was Jason Greenblatt, who is now President Trump’s envoy to negotiate Middle East peace. (The White House declined to comment for this story, referring me instead to Sekulow, Trump’s lawyer, who also declined to discuss the specifics of the Batumi deal.)
A representative of the Silk Road Group told me that the company had been eager to assuage any ethical concerns the Trump Organization or other potential partners may have had, and so it had conducted due diligence—on itself. In May, 2012, the Silk Road Group commissioned K2 Intelligence, a firm founded by the investigator Jules Kroll, to produce a report. (This was fourteen months after the Trump Organization signed the Batumi deal.) I recently obtained a summary of the report, which explained that K2 was “asked to probe the background and integrity of S.R.G.’s principal shareholder, George Ramishvili, more deeply than a standard investigative or compliance report might.” However, the report seems to have addressed only one issue: a rumor, circulating in the Georgian media, that Ramishvili had once been a member of the Mkhedrioni, a right-wing militia.
K2 concluded that the rumor was false. The summary did not address the Silk Road Group’s funding sources, its complex legal structure, or its relationship to the B.T.A. Bank scandal, which was unfolding in London courts at the time. Other due diligence may have been performed, but the Silk Road Group, K2, and the Trump Organization declined to share specific information.
Ross Delston, a prominent anti-money-laundering attorney in Washington, D.C., told me that, if one of his clients approached him with the possibility of entering a licensing relationship with the people involved in the Batumi deal, he “would tell him not to walk away but to run away—to run like hell.” He explained, “There are too many aspects of the deal that don’t make sense, and there’s no way, as an outsider, that you could conduct sufficient due diligence to figure out if it is criminal.”
So many partners of the Trump Organization have been fined, sued, or criminally investigated for financial crimes that it is hard to ascribe the pattern to coincidence, or even to shoddy due diligence. In criminal law, there is a crucial concept called “willful blindness”: a person can be convicted of a crime even if he was unaware of certain aspects of the crime in which he was engaged. In U.S. courts, judges routinely explain to juries that “no one can avoid responsibility for a crime by deliberately ignoring what is obvious.” (When the Trump Organization cancelled the Batumi deal, it noted that it held the Silk Road Group “in the highest regard.”)
John Madinger, the former Treasury official, said that, in any deal that might involve money laundering, there is one critical question: “Does the financial transaction make economic or business sense?” In recent years, a lot of residential housing has been built in Batumi, but most of it has consisted of what Colliers, the market-analysis firm, calls “low-segment”—down-market—apartments. The Trump Organization, with its extensive experience in the luxury real-estate market, could surely sense that it would not be easy to enlist hundreds of wealthy people to buy multimillion-dollar condominiums in Batumi. I asked several New York real-estate developers to assess the proposed tower. One laughed and said that the Batumi deal reminded him of “The Producers,” the Mel Brooks movie about two charlatans who create a horrible musical designed to fail. Another New York developer, who spent years making deals in the former Soviet Union, told me, “A forty-seven-story tower of luxury condominiums in Batumi is an insane idea. I wouldn’t have gone near a project like this.”
Giorgi Rtskhiladze, the Silk Road Transatlantic Alliance executive, confirmed that the luxury-housing market in Batumi was nonexistent in 2012, when he invited Donald Trump to visit Georgia, but said that the tower’s investors were nonetheless confident that a Trump-branded skyscraper would attract buyers. He insisted that the Silk Road Group had not taken part in anything illicit, and said that B.T.A. Bank’s 2005 decision to lend the Silk Road Group several hundred million dollars was hardly suspicious. The company had been working in Kazakhstan for years, transporting oil products, and had become close with the Tatishev family. When the bank that Tatishev helped run, B.T.A., decided to invest in redeveloping Batumi, the obvious partner was the Silk Road Group. “We were the partner they knew,” Rtskhiladze said. “We’re active in the region.”
Rtskhiladze acknowledged that it was quite a big loan for such a poor country. “Unbelievable,” he called it. And it was true that the Silk Road Group had little experience in hotels or construction or telecommunications when it suddenly entered those industries. But, he pointed out, Georgia was still emerging from the torpid days of the Soviet Union. “You’re talking about a country that had no experience,” he said. “Nobody else had experience.” In any case, he suggested, “real-estate development wasn’t that complicated. You hire third parties, who do feasibility studies. You look at the numbers. It wasn’t that difficult.” He added, “We like to do clean, transparent business.”
I asked Rtskhiladze why he had invited Trump, who has generally avoided travelling abroad, to Georgia. He told me a story from 1989, when he was a young soldier in the Soviet Army. “They told me, for target practice, to shoot Ronald Reagan’s face,” he recalled. “I refused.” The Army jailed him for several days. Soon after he was released, he said, he saw a magazine with Trump on the cover. He told himself, “One day, I will go to New York and meet this man.”
He argued that the fact that “there was no luxury in Batumi” was precisely why the idea of a Trump Tower was so smart. The skyscraper, with its “pool and gyms and conference rooms,” would single-handedly create “an entire universe of very New York-style luxury in a seaside town.” The luxury condominiums, he added, were “for international buyers—Saudis, Turks, Russians.” In his “strong opinion,” the Trump brand was “the only brand for them.” (David Borger, the Silk Road Group executive, told me that a study by a well-regarded Turkish firm had concluded that the tower was a good business idea, but he declined to share the name of the firm or the study.)
Melanie A. Bonvicino, who handles communications for the Silk Road Group, told me that the Trump Tower Batumi deal demonstrated an openhearted vision. “With the Batumi project, Trump was once again able to demonstrate his keen business sense,” she wrote in an e-mail. “Donald Trump in his role as futurist and visionary ordained the region as the next big thing. Mr. Trump had an immediate grasp over the geopolitical significance of the Republic of Georgia and its Black Sea region, acknowledging its vast potential by jointly transforming this hidden gem into the next Riviera. In the élite realm of global residential and commercial real-estate developers, the Trump moniker was and remains synonymous with Coca-Cola, Pepsi, and Michael Jackson.”
In
2009, when Ablyazov fled to London, the Kazakh government seized
control of B.T.A. Bank. (Tatishev moved to Singapore in 2013.) A lawyer
representing the bank, Roman Marchenko, informed the Silk Road Group
that he had reason to believe that it had participated in Ablyazov’s
loan scheme. The Silk Road Group denied any wrongdoing. A settlement was
reached, for fifty million dollars—a bargain price, considering that
the loans had totalled three hundred million. Marchenko believes that
the Silk Road Group was deeply entwined with Ablyazov, but Kazakh
government officials decided to stop investigating. They were pursuing
Ablyazov’s stolen assets all over the world, and there was more money in
other countries.The Financial Action Task Force, headquartered in Paris, is led by representatives from thirty-seven nations. In 2007, the task force issued a report about the use of real-estate projects for money laundering. The report makes note of several red flags. It warns of “complex loans” in which businesses “lend themselves money, creating the appearance that the funds are legitimate.” It also warns of the use of offshore shell companies and tangled corporate legal structures, especially those in which third parties are hired to administer a company and conceal its true ownership. These intertwined companies can then trade property among themselves, in order to create inflated valuations: “An often-used structure is, for example, the setting up of shell companies to buy real estate. Shortly after acquiring the properties, the companies are voluntarily wound up, and the criminals then repurchase the property at a price considerably above the original purchase price. This enables them to insert a sum of money into the financial system equal to the original purchase price plus the capital gain, thereby allowing them to conceal the origin of their funds.”
The report states that money launderers often find that “buying a hotel, a restaurant or other similar investment offers further advantages, as it brings with it a business activity in which there is extensive use of cash.” Casinos—like the one planned for the Trump Tower Batumi—are especially useful in this regard. The casino was to be owned by the Silk Road Group and its partners.
Alan Garten, the chief legal officer for the Trump Organization, declined to describe the due diligence behind the Batumi tower. When the deal was signed, the general counsel for the Trump Organization was Jason Greenblatt, who is now President Trump’s envoy to negotiate Middle East peace. (The White House declined to comment for this story, referring me instead to Sekulow, Trump’s lawyer, who also declined to discuss the specifics of the Batumi deal.)
A representative of the Silk Road Group told me that the company had been eager to assuage any ethical concerns the Trump Organization or other potential partners may have had, and so it had conducted due diligence—on itself. In May, 2012, the Silk Road Group commissioned K2 Intelligence, a firm founded by the investigator Jules Kroll, to produce a report. (This was fourteen months after the Trump Organization signed the Batumi deal.) I recently obtained a summary of the report, which explained that K2 was “asked to probe the background and integrity of S.R.G.’s principal shareholder, George Ramishvili, more deeply than a standard investigative or compliance report might.” However, the report seems to have addressed only one issue: a rumor, circulating in the Georgian media, that Ramishvili had once been a member of the Mkhedrioni, a right-wing militia.
K2 concluded that the rumor was false. The summary did not address the Silk Road Group’s funding sources, its complex legal structure, or its relationship to the B.T.A. Bank scandal, which was unfolding in London courts at the time. Other due diligence may have been performed, but the Silk Road Group, K2, and the Trump Organization declined to share specific information.
Ross Delston, a prominent anti-money-laundering attorney in Washington, D.C., told me that, if one of his clients approached him with the possibility of entering a licensing relationship with the people involved in the Batumi deal, he “would tell him not to walk away but to run away—to run like hell.” He explained, “There are too many aspects of the deal that don’t make sense, and there’s no way, as an outsider, that you could conduct sufficient due diligence to figure out if it is criminal.”
So many partners of the Trump Organization have been fined, sued, or criminally investigated for financial crimes that it is hard to ascribe the pattern to coincidence, or even to shoddy due diligence. In criminal law, there is a crucial concept called “willful blindness”: a person can be convicted of a crime even if he was unaware of certain aspects of the crime in which he was engaged. In U.S. courts, judges routinely explain to juries that “no one can avoid responsibility for a crime by deliberately ignoring what is obvious.” (When the Trump Organization cancelled the Batumi deal, it noted that it held the Silk Road Group “in the highest regard.”)
John Madinger, the former Treasury official, said that, in any deal that might involve money laundering, there is one critical question: “Does the financial transaction make economic or business sense?” In recent years, a lot of residential housing has been built in Batumi, but most of it has consisted of what Colliers, the market-analysis firm, calls “low-segment”—down-market—apartments. The Trump Organization, with its extensive experience in the luxury real-estate market, could surely sense that it would not be easy to enlist hundreds of wealthy people to buy multimillion-dollar condominiums in Batumi. I asked several New York real-estate developers to assess the proposed tower. One laughed and said that the Batumi deal reminded him of “The Producers,” the Mel Brooks movie about two charlatans who create a horrible musical designed to fail. Another New York developer, who spent years making deals in the former Soviet Union, told me, “A forty-seven-story tower of luxury condominiums in Batumi is an insane idea. I wouldn’t have gone near a project like this.”
Giorgi Rtskhiladze, the Silk Road Transatlantic Alliance executive, confirmed that the luxury-housing market in Batumi was nonexistent in 2012, when he invited Donald Trump to visit Georgia, but said that the tower’s investors were nonetheless confident that a Trump-branded skyscraper would attract buyers. He insisted that the Silk Road Group had not taken part in anything illicit, and said that B.T.A. Bank’s 2005 decision to lend the Silk Road Group several hundred million dollars was hardly suspicious. The company had been working in Kazakhstan for years, transporting oil products, and had become close with the Tatishev family. When the bank that Tatishev helped run, B.T.A., decided to invest in redeveloping Batumi, the obvious partner was the Silk Road Group. “We were the partner they knew,” Rtskhiladze said. “We’re active in the region.”
Rtskhiladze acknowledged that it was quite a big loan for such a poor country. “Unbelievable,” he called it. And it was true that the Silk Road Group had little experience in hotels or construction or telecommunications when it suddenly entered those industries. But, he pointed out, Georgia was still emerging from the torpid days of the Soviet Union. “You’re talking about a country that had no experience,” he said. “Nobody else had experience.” In any case, he suggested, “real-estate development wasn’t that complicated. You hire third parties, who do feasibility studies. You look at the numbers. It wasn’t that difficult.” He added, “We like to do clean, transparent business.”
I asked Rtskhiladze why he had invited Trump, who has generally avoided travelling abroad, to Georgia. He told me a story from 1989, when he was a young soldier in the Soviet Army. “They told me, for target practice, to shoot Ronald Reagan’s face,” he recalled. “I refused.” The Army jailed him for several days. Soon after he was released, he said, he saw a magazine with Trump on the cover. He told himself, “One day, I will go to New York and meet this man.”
He argued that the fact that “there was no luxury in Batumi” was precisely why the idea of a Trump Tower was so smart. The skyscraper, with its “pool and gyms and conference rooms,” would single-handedly create “an entire universe of very New York-style luxury in a seaside town.” The luxury condominiums, he added, were “for international buyers—Saudis, Turks, Russians.” In his “strong opinion,” the Trump brand was “the only brand for them.” (David Borger, the Silk Road Group executive, told me that a study by a well-regarded Turkish firm had concluded that the tower was a good business idea, but he declined to share the name of the firm or the study.)
Melanie A. Bonvicino, who handles communications for the Silk Road Group, told me that the Trump Tower Batumi deal demonstrated an openhearted vision. “With the Batumi project, Trump was once again able to demonstrate his keen business sense,” she wrote in an e-mail. “Donald Trump in his role as futurist and visionary ordained the region as the next big thing. Mr. Trump had an immediate grasp over the geopolitical significance of the Republic of Georgia and its Black Sea region, acknowledging its vast potential by jointly transforming this hidden gem into the next Riviera. In the élite realm of global residential and commercial real-estate developers, the Trump moniker was and remains synonymous with Coca-Cola, Pepsi, and Michael Jackson.”
The Kazakh government placed B.T.A. Bank’s assets under the authority of its sovereign-wealth fund. Soon after, Timur Kulibayev—the powerful son-in-law of the country’s dictator, Nursultan Nazarbayev—became the director of the fund. Kulibayev and his staff had access to all the bank’s internal documents. Recently, Kulibayev became the majority owner of the bank, giving him total control over B.T.A.’s archives, as well as ownership of its assets. Kulibayev was surely familiar with the players involved in the Trump Tower Batumi project. In 2011, Giorgi Rtskhiladze and Michael Cohen, the Trump Organization executive, began promoting the idea of a Trump Tower in Astana, the capital of Kazakhstan. They visited Astana and met with Karim Masimov, the Prime Minister. Masimov is now the head of Kazakhstan’s national-security apparatus.
Keith Darden is a political scientist at American University who has written extensively on the use of compromising information—kompromat—by former Soviet regimes against people they want to control. He told me that Kazakh intelligence is believed to collect dossiers on every significant business transaction involving the country. This would be especially true if a famous American developer was part of the deal, even if it would not have occurred to them that he might one day become the U.S. President. “There is no question—they know everything about this deal,” Darden said.
Darden explained that Kazakh intelligence agents work closely with their Russian counterparts. Kulibayev himself has direct ties to Russia’s leadership. In 2011, he was named to the board of Gazprom, the Russian gas behemoth, which is widely considered to be a pillar of Putin’s fortune. In “The Return: Russia’s Journey from Gorbachev to Medvedev,” Daniel Treisman, a political scientist at U.C.L.A. who specializes in Russia, wrote, “For Putin, Gazprom was a personal obsession. He memorized the details of the company’s accounts, its pricing rules and pipeline routes. He personally approved all appointments down to the deputy level, sometimes forgetting to tell the company’s actual C.E.O., Aleksey Miller.” Kulibayev could not possibly be serving on Gazprom’s board without Putin’s assent.
Robert Mueller has assembled a team of sixteen lawyers. One of them is fluent in Russian, and five have extensive experience investigating and prosecuting cases of money laundering, foreign corruption, and complex financial conspiracies. The path from Trump to Putin, if one exists, might be found in one of his foreign real-estate deals.
When Mueller was appointed special counsel, his official writ was to investigate not just “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump” but also “any matters that arose or may arise directly from the investigation.” Much hinges on the word “directly.” Sekulow, Trump’s lawyer, insists that Mueller’s mandate essentially stops at the Russian border. Pawneet Abramowski, a former F.B.I. intelligence analyst, told me that Sekulow’s assertion is nonsensical. “You must follow the clues,” she said. When investigating a businessperson like Trump, “you have to follow the money and go wherever it leads—you must follow the clues all the way to the end.”
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