Trumpocracy Read online

Page 6


  Politicians accepted these new stricter post-Watergate standards because they assumed everybody else accepted them. But what if somebody decided to reject them? What would happen then? Donald Trump guessed: nothing much. He not only declined to release his tax returns, but directed campaign funds to his own businesses. As late as January 2016, half a year after the launch of Trump’s campaign for the Republican nomination, Trump’s associates pursued a deal to license the Trump name for a Trump Tower Moscow. When the deal ran into difficulties, Trump’s lawyer appealed for help to contacts in the Putin regime.4

  A rule-of-law state can withstand a certain amount of official corruption. What it cannot withstand is a culture of impunity. So long as officials believe that corruption will usually be detected—and if detected, then certainly punished—for just that long they will believe that corruption is wrong. It is for this reason that corrupt regimes swiftly evolve toward authoritarianism, and authoritarian regimes toward corruption. Outside of the Islamic world, the twenty-first century is not an era of ideology. The grand utopian visions of the nineteenth century have passed out of fashion. The nightmare totalitarian projects of the twentieth have been overthrown or have disintegrated, leaving behind only outdated remnants: North Korea, Cuba. What is spreading today is repressive kleptocracy, led by rulers motivated by greed rather than by the deranged idealism of Hitler or Stalin or Mao. Such rulers rely less on terror and more on rule twisting, the manipulation of information, and the co-option of elites. Their goal is self-enrichment; the corrosion of the rule of law is the necessary means. As a shrewd local observer explained to me on a visit to Hungary in early 2016, “The main benefit of controlling a modern bureaucratic state is not the power to persecute the innocent. It is the power to protect the guilty.”

  No president in history has burned more public money to sustain his personal lifestyle than Donald Trump. Three-quarters of the way through his first year in office, President Trump was on track to spend more on travel in one year of his presidency than Barack Obama in eight—even though Trump only rarely ventured west of the Mississippi or across any ocean.5

  In May 2017, Congress appropriated an additional $120 million to provide security to the Trump family, half of it to reimburse local police in Palm Beach and New York City for the extra costs imposed by President Trump’s weekend getaways and the decision by First Lady Melania Trump to maintain a separate residence in the first year of the Trump presidency.6 Even this record-breaking allowance soon proved inadequate. By August 2017, the Secret Service reported it had exhausted both its budget and its agents’ human capacity for overtime work. Facing a wave of resignations and retirements, the Secret Service asked Congress to raise the cap on agents’ pay and overtime from $160,000 to $187,000. Kevin Johnson reported in USA Today:

  The president’s jaunts to Mar-a-Lago are estimated to cost at least $3 million each, based on a General Accounting Office estimate for similar travel by former President Obama. The Secret Service has spent some $60,000 on golf cart rentals alone this year to protect Trump at both Mar-a-Lago and Bedminster.7

  The annual Kushner family ski vacation in Aspen in March 2017 cost taxpayers at least $330,000.8 An Eric Trump business trip to Uruguay in early January 2017 cost the Secret Service nearly $100,000 just for hotel rooms. It cost tens of thousands more to accompany Donald Trump Jr. to Vancouver in March 2017 and to protect Tiffany Trump, the president’s youngest daughter, on a German tour and Mediterranean yachting holiday in July.9

  Costly as the Trump family was to the presidency, the presidency was correspondingly lucrative to the Trump family. Jonathan O’Connell reported in the Washington Post in August 2017 that the Trump hotel in Washington, DC, collected $4.1 million more than projected in the first four months of that year.10 Foreign governments, US corporations, and Trump’s own super PAC made the Trump hotel their first choice of venue.11 Earnings from food and drink exceeded expectations by more than 37 percent. Despite a low occupancy rate—only 42 percent—the hotel managed to extract an average room rate from the guests who did stay there of almost $660, versus an average of $495 at Washington’s other ultraluxury hotels.12

  Party funds poured into Trump’s personal pockets. The Republican National Committee, Trump’s 2020 reelection effort, the Republican Governors Association, and other GOP campaigns and committees together spent about $1.3 million at Trump properties in the first half of 2017.13

  Trump’s Florida clubhouse, Mar-a-Lago, doubled its initiation fee to $200,000 in January 2017.14 Trump formed his 2020 reelection committee on his inauguration day. In its first six months of existence, the committee spent $600,000 of its donors’ money at Trump-branded properties.15 The US military spends $130,000 per month to lease space in Trump Tower, on the chance Trump might need communications equipment on a visit to his home. (The arrangement is a sublet, however, so Trump may not receive any of the money personally.16)

  These petty grifts swelled the income and enhanced the lifestyle of a family that always needed more—and was never particular about where that “more” came from. (And unlike the sad students at Trump University, whose fraud lawsuit was settled by the Trump Organization in March 2017 for $25 million,17 the US government could bear the cost.) Yet even $600,000 here, $4 million there, hardly amounted to big money by the standards of Trump family ambition—or Trump family exigency.

  Donald Trump and his Kushner in-laws are perceived as fabulously wealthy. But while they do own substantial assets, they also owe enormous debts, and it has never been clear for either family how those two figures balance. Trump has teetered on the edge of ruin again and again through his career. Over the decade since the 2008 financial crisis, his son-in-law seems to have faced ruin on an even more epic scale.

  In 2007, Jared Kushner persuaded his family group to purchase an Eisenhower-era office building on New York’s Fifth Avenue for a then record-setting $1.8 billion, financed by $1.215 billion in commercial mortgage bonds. The deal almost instantly went catastrophically wrong. Occupancy dropped in the wake of the financial crisis of 2008. Rents collapsed. Things did not improve for the Kushners’ 666 Fifth Avenue property during the recovery. The business locus of New York shifted west and south, away from Fifth Avenue, and often out of Manhattan entirely. A post-2010 building boom offered potential tenants more attractive contemporary premises at competitive rents. The Kushner building lost $10 million in 2015 and was on track to lose considerably more in 2016.

  By November 2016, the situation was becoming truly desperate. The Kushner family had refinanced the building in 2011, promising to reinvent it as a glittering new condo tower, doubling its height and adding glamorous new retail space. This additional capital came with a tough time limit. The interest rate on the loan was scheduled to double to 6.35 percent in December 2016; harsh new fees would come due as well.18

  But in the interim, a miracle had occurred: the political rise of Donald Trump. The Kushner family very suddenly found itself attracting prospective financial partners from around the world, as Susanne Craig, Jo Becker, and Jesse Drucker reported in the New York Times.

  On the night of Nov. 16, [2016] a group of executives gathered in a private dining room of the restaurant La Chine at the Waldorf Astoria hotel in Midtown Manhattan. The table was laden with Chinese delicacies and $2,100 bottles of Château Lafite Rothschild. At one end sat Wu Xiaohui, the chairman of the Waldorf’s owner, Anbang Insurance Group, a Chinese financial behemoth with estimated assets of $285 billion and an ownership structure shrouded in mystery. Close by sat Jared Kushner, a major New York real estate investor whose father-in-law, Donald J. Trump, had just been elected president of the United States.

  It was a mutually auspicious moment.

  Mr. Wu and Mr. Kushner—who is married to Mr. Trump’s daughter Ivanka and is one of his closest advisers—were nearing agreement on a joint venture in Manhattan: the redevelopment of 666 Fifth Avenue, the fading crown jewel of the Kushner family real-estate empire. Anbang, which has close tie
s to the Chinese state, has seen its aggressive efforts to buy up hotels in the United States slowed amid concerns raised by Obama administration officials who review foreign investments for national security risk.

  Now, according to two people with knowledge of the get-together, Mr. Wu toasted Mr. Trump and declared his desire to meet the president-elect, whose ascension, he was sure, would be good for global business.19

  Kushner never got his Chinese loan. Anbang retreated rather than face the glare of American publicity. But Chinese money did continue to flow to the Kushner family. Even as Jared Kushner emerged as the most influential adviser to the president of the United States, his relatives marketed condominiums in China with the promise that an “investor visa” came attached. Emily Rauhala and William Wan of the Washington Post attended just such a marketing meeting in Beijing in May 2017. The arrival of American reporters upset the organizers, who roughly tried to eject them from the hall, explaining, “This is not the story we want.” But it’s the story that happened:

  Over several hours of slide shows and presentations, representatives from the Kushner family business urged Chinese citizens gathered at a Ritz-Carlton hotel to consider investing hundreds of thousands of dollars in a New Jersey luxury apartment complex that would help them secure what’s known as an investor visa.

  The potential investors were advised to invest sooner rather than later in case visa rules change under the Trump administration. “Invest early, and you will invest under the old rules,” one speaker said.

  The tagline on a brochure for the event: “Invest $500,000 and immigrate to the United States.”

  And the highlight of the afternoon was [Nicole Kushner] Meyer, a principal for the company, who was introduced in promotional materials as Jared’s sister.20

  Russian banks also acquired a keen new enthusiasm for Kushner family projects. Over the course of the 2016 presidential campaign, Kushner had a number of conversations with Sergey Kislyak, the Russian ambassador to the United States. Two would be disclosed on Kushner’s application for a security clearance. The rest would not—not until press reports compelled Kushner to correct the record after the fact. Kushner would also meet with the head of a Russian state-owned bank implicated in past espionage against the United States. Ned Parker and Jonathan Landy reported for Reuters on the FBI’s suspicions about these meetings.

  FBI investigators are examining whether Russians suggested to Kushner or other Trump aides that relaxing economic sanctions would allow Russian banks to offer financing to people with ties to Trump, said the current U.S. law enforcement official. . . . The bank said in a statement in March that it had met with Kushner along with other representatives of U.S. banks and business as part of preparing a new corporate strategy.21

  A very great many corporations, foreign and domestic, were preparing the same “new strategy.”

  Through the transition period, President-Elect Trump and his family used their new position to recognize old business associates and seek new ones. On November 14, 2016, Trump spoke for fifteen minutes to the president of Argentina, Mauricio Macri. According to reports in the Argentine media, Trump mentioned that a Trump-licensed building in Buenos Aires was stalled in the permitting process. The next day, Trump’s local partners triumphantly announced that the building was moving forward. It would later emerge that not only had Trump’s daughter Ivanka joined the call, but that Trump’s son Eric had arranged it, at the request of Trump’s lead partner in the Buenos Aires deal.22

  Trump had licensed his name to five projects in India. His partners in those projects stopped by Trump Tower on November 17, 2016. They discussed business with Trump’s three adult children, posed for a photo with the president-elect, and gave an interview afterward to an Indian publication, The Economic Times.23 That’s how Americans learned of the meeting: as with the Argentine discussions, the Trump transition team had provided no notice or readout of the meeting to any American media.

  On November 18, 2016, President-Elect Trump would meet with Japan’s prime minister, Shinzo Abe, at Trump Tower. Photographs of the encounter between the two leaders showed Trump’s daughter Ivanka in attendance. Jared Kushner joined the group as well. At the time of the meeting, Ivanka Trump was in negotiations to license her clothing brand to a big Japanese retailer. That retailer was owned by a Japanese bank, which was in turn wholly owned by the Japanese government.24 (The deal would ultimately fail.25)

  Trump tangled government, family, and business in the style of an authoritarian Third World kleptocrat. When a staffer at the National Security Council (NSC) wrote a memo denouncing H. R. McMaster, Trump’s national security adviser, as one of the cultural Marxist “globalists” waging Maoist insurgency against the Trump administration, the document was brought to the president’s attention by his son Donald Jr., the new CEO of the Trump Organization, and therefore someone supposedly walled off from the internal workings of the national security agencies.26

  Authoritarian governments around the world scented possibility in an incoming Trump administration whose style so resembled theirs. Days before the 2016 election, the brutal president of the Philippines, Rodrigo Duterte, named the developer of Manila’s Trump-branded property as his special envoy to the United States.27 Duterte would collect his reward in the form of a flattering phone call from President Trump on April 29, 2017.

  Trump: I just wanted to congratulate you, because I am hearing of the unbelievable job on the drug problem. Many countries have the problem, we have a problem, but what a great job you are doing. I just wanted to call and tell you that.

  Duterte: Thank you, Mr. President. This is the scourge of my nation now, and I have to do something to preserve the Filipino nation.

  Trump: I understand that and fully understand that, and I think we had a previous president who did not understand that.28

  In February 2017, the Trump Organization announced plans for Scion, a new lower-cost hotel line in the United States. Its first franchise, in Dallas, would be developed in partnership with a company with deep connections in Russia, Turkey, and Kazakhstan. The New York Times reported in May that the developer

  has been quoted in the Dallas Business Journal, saying that the deal would be financed by his family and business associates in Turkey and Kazakhstan. In recent statements to the Dallas Morning News . . . he backed away from those claims and said the money would come only from him and two American partners. He declined to elaborate to The Times.29

  The government of China approved thirty-eight Trump trademarks in the single month of March 2017. By the end of May, China had granted the president a total of seventy-seven, plus a spate more for his daughter Ivanka. The Trump Organization had applied for these marks only a year earlier. Erika Kinetz of the Associated Press reported from Shanghai:

  Dan Plane, a director at Simone IP Services, a Hong Kong intellectual property consultancy, said he had never seen so many applications approved so expeditiously.

  “For all these marks to sail through so quickly and cleanly, with no similar marks, no identical marks, no issues with specifications—boy, it’s weird,” he said. . . . Plane said he would be “very, very surprised” if officials from the ruling Communist party were not monitoring Trump’s intellectual property interests. “This is just way over your average trademark examiner’s pay grade,” he said.30

  Until the financial crisis of 2008, Donald Trump had almost no business interests outside the United States. That year’s crisis shattered what remained of his real-estate development activity. By the fall of 2008, Trump’s casino operation had staggered to its final, terminal bankruptcy. Trump Mortgage had collapsed. Trump-licensed towers in Florida and Georgia were failing. Trump companies defaulted on $334 million of debt repayment due Deutsche Bank on his last big personally directed project: Trump Tower Chicago.31

  But Trump remained a TV star, thanks to NBC’s Apprentice. His name had become a global symbol of ostentatious gimcrack luxe. A brand that once sought to dominate New York City
settled for being big in Baku.32 The message went forth from Pinsk to Penang, and everywhere dirty money is gained and hidden: If you are looking for someone to shine you up, you can find him in Trump Tower.

  A five-bylined story for Reuters in March 2017 reported, “At least 63 individuals with Russian passports or addresses have bought at least $98.4 million worth of property in seven Trump-branded luxury towers in southern Florida.”33 In the year after Donald Trump secured the Republican presidential nomination, 70 percent of Trump’s customers made their purchases through identity-shielding corporations. Trump sold $33 million worth of real estate in this concealed way in the six months after the 2016 election.34

  Trump and his son-in-law Jared Kushner claimed to have put in place ethical safeguards against conflicts of interest. These safeguards proved utterly derisory, when not wholly fictitious. David Enrich reported in the Wall Street Journal in July 2017 that at a White House tech summit organized by Jared Kushner, the only start-up with a seat at the table was OpenGov.com, partly owned by Jared’s brother Josh.35

  Kushner promised to divest himself from his family’s holdings. But who on earth would buy Jared Kushner’s stake in the 666 Fifth Avenue project? What “divestment” meant in this case was accepting an IOU for his share from other relatives, an IOU that would acquire net value only if someone could be persuaded to rescue the Kushner family as a whole, Jared included.36