Did the Trump Tower project in Azerbaijan breach anti-corruption laws?

Two years ago, Mr Trump told CNBC that the nation was “absolutely crazy” to prosecute corporations for violations in places like Mexico and China, saying the law put US business interests at a “huge disadvantage”.

And three years earlier, he was quoted saying that if American companies refused to give bribes, “you’ll do business nowhere”.

Now concerning details have been aired about the entrepreneur-turned-president’s former dealings in Azerbaijan, an oil-rich former Soviet republic known as one of the most corrupt nations in the world.

A Trump Tower hotel project in Azerbaijan was among a handful of deals cancelled by the president ahead of his December inauguration, in what the Trump Organisation dubbed “housecleaning”.

The 33-story luxury skyscraper sits empty in a run-down neighbourhood of capital city Baku, where it was built on land partly controlled by the Transportation Ministry.

The company behind the project, Baku XXI Century, is run by relatives of former Transportation Minister Ziya Mammadov, an oligarch described in US Embassy cables published by WikiLeaks as “notoriously corrupt” and having links to the Iranian Revolutionary Guard, a New Yorker investigation reveals.

The Mammadov family amassed vast sums of unexplained wealth during his ministerial term, during which Azerbaijan’s road construction program was “the most expensive in the world”, according to an independent think tank.

Anar Mammadov

Ziya Mammadov’s son Anar Mammadov, a 34-year-old billionaire playboy who has spent almost $US13 million lobbying US officials on behalf of Azerbaijani interests, started building the tower in 2008.

The Trump Organisation came on board in 2012 with a licensing deal allowing the building to bear the Trump name which is understood to have netted more than $US5 million.

But the organisation was never formally in charge of the project, and did not hold a financial stake in it.

Nonetheless, the New Yorker argues that the Trump Organisation may have violated the Foreign Corrupt Practices Act by profiting from any corrupt conduct carried out by the Mammadovs — an allegation the organisation denies.

It quotes sources claiming that cash payments in the hundreds of thousands and even millions of dollars were made to contractors working on the tower, with one construction worker stating that a colleague “had to bring a duffel bag” to collect $US2 million.

“No evidence has surfaced showing that Donald Trump, or any of his employees involved in the Baku deal, actively participated in bribery, money laundering, or other illegal behaviour,” the New Yorker piece states.

“But the Trump Organisation may have broken the law in its work with the Mammadov family.”

Ivanka Trump toured the Baku Tower site in 2014, blogging about the experience and sharing a video from her hotel balcony.

“Ivanka has overseen the development of Trump International Hotel & Tower Baku since its inception, and she recently returned from a trip to the fascinating city in Azerbaijan to check in on the project’s progress,” an archived post on her website said.

Anar Mammadov referred to Ivanka as a “dear friend” in a congratulatory message posted on Instagram during the presidential inauguration.

The Trump Organisation has maintained that it had little to do with the Baku Hotel project, apart from licensing it to use the Trump name.

But the New Yorker cited several insiders who claimed that the company tightly managed every stage of construction, down to the expensive Macassar ebony wood panelling which Ivanka reportedly chose for the ceiling of the lobby.

It went on to argue that American companies cannot simply plead ignorance of corruption by overseas business partners, with tightened anti-corruption laws enacted after 9/11 requiring corporations to do their research.

Had the Trump Organisation done so, it argued, a glaringly obvious red flag would have been detected in the Mammadov family’s connection with Keyumars Darvishi, an Iran-Iraq War veteran with links to the Iranian Revolutionary Guard.

Experts say the Revolutionary Guard uses a network of shadow businesses to evade US sanctions and fund its illicit activities.

The US has repeatedly accused that group of drug trafficking, money laundering and sponsoring terrorism abroad, and the Trump administration recently flagged plans to officially designate it as a terrorist organisation.

LEGAL ACTION ‘UNLIKELY’

The legal experts are not united in their assessment of the Trump Organisation’s Baku deal.

Southern Illinois University Law School Professor Mike Koehler claimed in a blog post that the New Yorker had contacted him about the issue, but declined to quote him because his views diverged from its preferred narrative.

Prof Koehler, who is an expert on the Foreign Corrupt Practices Act, said the Trump Organisation would be unlikely to be found to have breached the law because it did not retain a financial stake in the Baku project.

He said he had never heard of an FCPA enforcement action involving a licensor/licensee relationship “in the nearly 40-year history of the statute”.

“Just because the Trump Organisation may have been associated with a real estate development project that may have, at one point in time, been tainted by corruption does not therefore mean that the above FCPA elements have been met,” he wrote, accusing the New Yorker of a “highly selective” reading of the case law.

dana.mccauley@news.com.au