As the author of a thriller series of novels set in the world of international corporate espionage where corruption is rampant and most deals are high risk, I read the recent articles on the Azerbaijani business of the Trump Organization with a fascination bordering on disbelief.
Never would the most aggressive of my fictional dealmakers seem to pay so little attention to the legal and reputational risks of operating in a high-risk emerging market like Azerbaijan. If the reports in Newsweek, the Washington Post and the Associated Press, are accurate, then truth has indeed trumped fiction.
Although construction on the Trump International Hotel & Tower in Baku stopped in 2015 when Azerbaijan’s petro economy cratered due to the fall in oil prices, the Trump Organization has reportedly made millions by licensing in 2012 the right to use Donald Trump’s name and from management fees. Just another shrewd, low-risk, high-reward business deal I thought initially. However, when I read that the local partner was a young billionaire, Anar Mammadov, I began to wonder. The articles reported that Mammadov owed much of his fortune to construction contracts awarded through the Transportation Ministry run by Ziya Mammadov, Anar’s father, a longtime confidant of President Ilham Aliyev and a man according to the Associated Press article “suspected by U.S. diplomats of laundering money for Iran’s military and described as ‘notoriously corrupt.’”
Although construction on the Trump International Hotel & Tower in Baku stopped in 2015 when Azerbaijan’s petro economy cratered due to the fall in oil prices, the Trump Organization has reportedly made millions by licensing in 2012 the right to use Donald Trump’s name and from management fees. Just another shrewd, low-risk, high-reward business deal I thought initially. However, when I read that the local partner was a young billionaire, Anar Mammadov, I began to wonder. The articles reported that Mammadov owed much of his fortune to construction contracts awarded through the Transportation Ministry run by Ziya Mammadov, Anar’s father, a longtime confidant of President Ilham Aliyev and a man according to the Associated Press article “suspected by U.S. diplomats of laundering money for Iran’s military and described as ‘notoriously corrupt.’”
While none of the articles alleges that the Trump Organization violated any laws, the question remains why it would choose to partner with someone whose background raised so many red flags. Trump’s General Counsel reportedly told the Associated Press that a third party investigative firm was used to conduct due diligence on Anar but not on Ziya Mammadov because the father was not a party to the deal. And the Washington Post reported that the General Counsel was unaware at the time the deal was signed of the rumored source of Anar’s business success.
While the father may not have technically been a party to the deal, my experience is that an investigative firm of any quality would certainly inform its client of a potential partner’s relationship with a politically exposed father. Moreover, it is difficult to believe that a sophisticated international company would not want answers to basic business questions concerning a potential partner, such as: how did the prospective partner build such a successful business so quickly and what evidence is there that the partner would be able to complete the Trump Tower project on time and with the quality that the Trump name demands?
A failure to probe beyond the surface poses real risks to a U.S. company. Congressional reports to the Foreign Corrupt Practices Act make it clear that a U.S. business is liable when it has knowledge that a third party, such as a partner, will pay bribes and that “knowledge” includes a situation when the U.S. business consciously disregards circumstances - such as a rumors of past corrupt dealings, a relationship with a high-ranking official, etc. - that present a high probability that the bribes will be paid.
Moreover, the apparent lack of a sophisticated investigation into the Azerbaijani partner cannot be ascribed to ignorance of U.S. anti-bribery laws. In a CNBC SquawkBox interview with Donald Trump on May 15, 2012 (at around minute 14) concerning a Wal-Mart bribery scandal. Trump called the Foreign Corrupt Practices Act a “horrible law” that “should be changed,” a law that puts U.S. business at a “huge disadvantage,” and that the “U.S. should not be the policeman of the world.” If the head of the Trump Organization was aware of the broad scope of the FCPA in 2012, then one can safely assume that his legal team was as well.
In my series of novels, the protagonist, Duncan Luke, is an expert in the gathering of business intelligence to help clients eliminate risks or obtain competitive advantage. Luke would never have allowed his client to go into a partnership with Anar Mammadov without detailed intelligence not just on him but on his family, business associates and business record. Likewise, Duncan Luke would not have allowed his client to just assume that the politically exposed father was not part of the deal; he would have demanded detailed representations of fact and binding commitments to insure the son kept their partnership’s business completely walled off from the father and managed that business with sound internal controls and accurate accounting. And then he would have asked his client whether, under those circumstances, the partnership with Anar Mammadov still made business sense.
But, of course, that’s fiction.
#Trump, #Congress, #Corruption, #Azerbaijan
#Trump, #Congress, #Corruption, #Azerbaijan
No comments:
Post a Comment