Tower of secrets: the Russian money behind a Donald Trump skyscraper

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Tower of secrets: the Russian money behind a Donald Trump skyscraper


https://www.ft.com/trumptoronto
The Trump Toronto reveals the links between a shadowy world of post-Soviet money and a future president



Tom Burgis yesterday


One October day in 2007, a celebrity real estate developer in a greatcoat and powder-blue tie alighted from a stretch limousine in Toronto’s financial district. Before a bank of photographers, he took hold of a golden shovel. To his left, also holding a novelty spade, was his partner in a C$500m (£287m) skyscraper, construction of which was to begin that day: a Russian-Canadian billionaire whose fortune had its origins in the collision of communism, capitalism and the KGB at the fall of the Soviet empire.

Also present were representatives of the project’s financial backers — an Austrian bank that would soon be accused of failing to conduct sufficient checks on the sources of its ex-Soviet clients’ money.

Camera flashes glinted on the shovels as the grinning dignitaries plunged them into a neat patch of dirt on which had been painted the word “Trump”. So commenced work on the Trump International Hotel and Tower Toronto. “People really want to own what I do,” Donald Trump told an interviewer that day, declaring that, among other qualities, the tower would be “taller than other buildings”.

The Financial Times has been investigating the money behind Trump Toronto for 10 months. Legal documents, signed statements and two dozen interviews with people with knowledge of the project and the money that flowed through it reveal that the venture connects the US president with a shadowy post-Soviet world where politics and personal enrichment merge.
Donald Trump at the 2007 groundbreaking for the Trump Toronto next to Alex Shnaider, his partner in the project © Getty

Some of the money flows that the Financial Times has established raise questions about Trump’s vulnerability to undue influence now that he is in the White House. These include evidence that Trump’s billionaire partner in the Toronto project authorised a secret $100m payment to a Moscow-based fixer representing Kremlin-backed investors. That payment was part of a series of transactions that generated millions for the backers of the Toronto venture — a project that, in turn, made millions for the future president.

A month after the 2007 groundbreaking, Trump wrote a letter to The Wall Street Journal citing the financing for “our” Trump Toronto project as “a testament to the strength of the Trump name and brand within the financial community”. But when the FT sent questions to the Trump Organization for this article, it declined to answer them, saying: “The Trump Organization was not the owner, developer or seller of the Trump International Hotel and Tower Toronto. Consequently, it had no involvement in the financing of the project. Instead, the company’s role was limited to licensing its brand and managing the hotel and residences, which it did until June 2017 when its agreement ended.”


Donald Trump's tower of secrets

It is precisely this approach to the provenance of the money that has sustained Trump’s business career that concerns many who have examined it closely. After a series of corporate bankruptcies in the 1990s and early 2000s left the property business he had inherited from his father largely unable to borrow from mainstream banks, Trump turned to ever more obscure backers. He was able to borrow sporadically from Deutsche Bank, with whom he had a long and fractious relationship, but, from about the turn of the millennium, he also adopted a new model, under which he licensed his brand to skyscraper developments that the Trump Organization would then manage under contract.

This was a time when the former Soviet Union’s newly minted oligarchs were seeking foreign havens for their wealth. By 2008, Trump’s son, Donald Jr, was telling a real estate conference: “Russians make up a pretty disproportionate cross-section of a lot of our assets . . . We see a lot of money pouring in from Russia.” Some of this came through sales of individual units in Trump-branded properties, where Trump was sometimes entitled to a cut.
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