FREAKY FRIDAY – Trump Organisation and realty deals: An unfinished story in India

Remember Lord Voldemort from the Harry Potter? A masked death-eater, who was using the body of ‘Professor Quirrell’ and ‘Tom Riddle’ to destroy Harry and his friends. He-who-cannot-be-named! Unfortunately, this is exactly the scenario of real estate licensing in Indian market.

Real estate in India is a notoriously corrupt industry, regulated by a hulking government bureaucracy that runs on graft. The World Bank Group’s most recent “Doing Business” report ranked India 181st out of 190 countries in terms of the difficulty of obtaining construction permits—an improvement over the previous year, when it ranked 185th.

Permits in the city center, including Lower Parel, where the Mumbai Trump Tower is being built, went for about USD 20 per square foot for the most basic permissions, according to a 2014 Times of India investigation. At that rate, bribes to secure permits for the tower, planned for 900,000 square feet, could easily run into the millions of dollars.

Like his master, ‘The Trump Organization’, which is a private conglomerate owned by him, is controversy’s favourite child.

Following the election of Donald Trump as US President in November 2016, the management of the company was transferred to his sons Trump Jr and Eric.

Donald Trump Senior, media’s favourite kid, faced yet another concern about the Trump presidency, which is the potential conflicts of interest he aspects as his children continue to represent the Trump Organization in business deals around the world. And the brand they’re selling is the name of the ‘Trump’ is now in the White House.

A businessman masquerade as a minister? Or, A minister trapped in the body of a businessman? Pretty confusing!

Things became more complicated when Trump Jr. arrived in India to promote several luxurious residential projects in the country. The projects are named after the elder Trump and are licensed by his firm Trump Organisation.

Recent Issue:

Donald Trump Jr. has made at least ten trips to India over the past decade, calling the country “the biggest push for our organization.”

However, his most recent visit to India was a headline-grabbing jaunt in February. In the days leading up to his four-day, all of the leading English-language newspapers in New Delhi carried full front-page ads featuring an image of Donald Jr., asking, “TRUMP HAS ARRIVED. HAVE YOU?” and, “TRUMP IS HERE. ARE YOU INVITED?” Anyone who, by midweek, had put down a deposit of about $39,000 on an apartment in the newest Trump Tower India project, located just outside New Delhi, would be invited to a Friday night dinner with him.”

A paid news? Might be!

It seems to give the impression that if you do favors for the Trump business, you get favors from the US government.

Donald Jr. was also expected to deliver a policy address on “Indo-Pacific” cooperation to business leaders and politicians at a major conference in the city. He changed his plans when ethicists and former government officials in the United States questioned whether the son of the American president should serve as a sort of informal government envoy on a trip to help promote a real estate venture. “I’m here as a businessman. I’m not representing anyone,” he was quoted as saying at the conference.

This lady digs into the king’s den….

Author Anjali Kamat, an investigative journalist and Belle Zeller visiting professor at Brooklyn College published its groundbreaking April cover story, “Political Corruption and The Art Of The Deal,” a bombshell investigative look at how the Trump Organization’s business partnerships in India are creating conflicts of interest in the White House and corrupting the presidency.

The journalist uncovers a long history of lawsuits, police inquiries, and government investigations that contain evidence of potential bribery, fraud, intimidation, illegal land acquisition, tax evasion, and money laundering. The Trump Organization’s ties to these partners leave it potentially vulnerable to violations of the Foreign Corrupt Practices Act, the 1977 law that prohibits U.S. companies or their business partners from bribing, or unduly influencing, foreign officials to advance a business deal.

The months-long investigation was conducted in collaboration with The Investigative Fund.

In an exclusive interview with NPR’s Terry Gross, Kamat on Ivanka Trump’s role in India’s business transaction deals was quoted as saying, “A retired planning official in Gurgaon, the suburb of New Delhi where the Trump Organization has two major developments coming up, told me that right after Ivanka’s trip, the permits, final permits on a project that was launched just before Don Jr.’s visit, those permits were rushed through. He told me it came through in no time, right after Ivanka’s trip, which raises a lot of questions about what kind of power Ivanka Trump’s presence in India can have in terms of Trump’s business interests.”

Talking about the bribe system in Trump Organisation, Kamat said while the Trump organization seems to have had legal counsel and legal firms in India helping them on their deals, one of the things I found out that’s really interesting is that the middlemen and the fixers they hire to help them procure deals, to help them scope out new licensing deals, are also responsible for doing due diligence.

“And this is something I was told by a former consultant to the Trump organization in India and also found on a draft agreement between the Trump Organization and another consultant where doing diligence on partners is a part of their responsibility. And the question here, when I took this to legal experts, is, why would you entrust someone who is getting a cut out of finding new deals with the job of also doing due diligence? Legal experts call this a clear conflict of interest,” he was quoted further from the NPR.

Commenting about Mumbai’s licensees and political connections, Kamat said, “The Trump Organization’s current partner in Mumbai is the Lodha Group, which was founded by a man named Mangal Prabhat Lodha. And he is a five-term state lawmaker with a party called the Bharatiya Janata Party, or the BJP. And that’s the party that the country’s prime minister, Narendra Modi, belongs to. So it’s the ruling party in India since 2014. They’ve been winning state elections since 2014. They’re gaining power across the country. The Lodha Group is the current licensing partner with the Trump Organization in Mumbai.”

While concluding the interview Kamat added that she wants to investigate the flow of money model in these transactions as its difficult because The Trump Organization entities involved are set up as LLCs in Delaware and almost all of the Indian licensees are private companies or limited liability partnerships with very limited reporting requirements.

Where all the controversy begins?

Donald Trump built his career in real estate in the 1970s and ’80s in New York City by cultivating, persuading, threatening, and manipulating politicians and public officials to obtain tax breaks and public subsidies for his construction projects.

According to a report in the New Republic, Trump Organization entered into international licensing deals in countries such as Argentina, Azerbaijan, Indonesia, and the Philippines. Interestingly, all these places ranked as highly corrupt by Transparency International.

India’s version of crony capitalism, in which wealthy business interests are inseparable from the government, and influence peddling is routine, must have felt like familiar terrain.

Trump’s first major partner in India was a man named Harresh Mehta, the founder of Rohan Lifescapes, a real estate firm that has reaped massive profits from Mumbai’s slum-redevelopment boom. Mehta was a controversial figure in Mumbai long before he met the Trumps. Commonly known as “Harresh bhai” or “Brother Harresh”, he is known for his close connections to the most powerful elected officials in the state.

Is it a fair business transaction?

A 2012 report by the Indian Ministry of Finance acknowledged that many real estate transactions are “not reported or are underreported.”

Agency records for the Mumbai Trump Tower show only 36 mortgages and sales registered since 2014, eight to Mangal Prabhat Lodha himself, and another nine to current and former Lodha Group directors and officials. Of the 23 apartments in the first Pune tower, which was completed and ready for occupancy in 2015, only 16 sales have been registered; in the second tower, launched by Donald Jr. in February, only one has been registered.

A look at Trump’s real estate deals in India:

India is Trump Organization’s biggest international market, with residential projects in four cities — Mumbai, Pune, Gurugram and Kolkata, and one commercial, estimated USD 1.5 billion.

Trump Jr during his visit to India met investors and business leaders in the four cities to expand the firm’s business interests

The organization’s fourth project titled ‘Trump Towers Delhi NCR’ was launched in Gurugram in January this year.

The Trump Organisation is not, however, investing in the project, which is a collaboration between NCR-based real estate major M3M and Tribeca Developers of Mumbai.

The properties are already pegged at rates 30 percent higher than the current market rates.

Construction of ‘Trump’ project with 137 luxury units is set to begin soon in Kolkata.

Equipped with all luxurious amenities such as private theatre, wine and cigar lunge; the Kolkata project is being built by a collaboration of Unimark, RDB Group and Tribeca.

Trump Jr will open a demo unit at the golden-facade Trump Tower, being built by the Lodha Group in Mumbai. In Pune, it was being constructed in collaboration with the Panchshil Developers.

…. To sum up:

As real estate transactions still a hidden topic, Trump’s conflicts of interest in India remain an unfinished story.

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