We live in interesting times. Our current (for the moment) President is enveloped in so many scandals that they have backed up into a paralyzing logjam of corruption. Think of the single semi-valid case that crippled the Clinton Administration, and then imagine a White House with dozens of moral, ethical and legal outrages of a far more consequential nature. That simple question of scale becomes a force of its own, large enough to bog down efforts to bring any individual matter to justice.
Two days prior to his inauguration, the President of the United States paid out a $25m settlement to his fraud victims. He is trying to claim executive immunity to escape the consequences of years of sexual harassment. He is in daily, public violation of laws banning executive branch officials from making money selling public office for foreign payments. There isn’t room in a blog post for even a cursory list of the Trump scandals that would have landed any other President in impeachment or prison.
If he is ever to face justice for his actions, focus will be key. Otherwise he and the rest of his clan will die of old age, free to walk the streets, still more or less rich, with a thousand court cases still pending and stalled.
Those on the left and right who are serious about protecting our public institutions should narrow their focus to Trump’s ties to Russia. Here’s why.
The Trump family’s decades of business dealings with Russian figures in business, crime and government (they tend to overlap) is key to understanding and thwarting his plans. Those ties form the most serious danger to our national interests rising from his administration. His sexual harassment and business frauds are nasty and depressing, but his relationship to an enemy power carries the potential to compromise our interests in ways that cannot be repaired. Uncovering those ties is our highest national security priority.
Congress is not yet serious about pursuing this question. You will know they are serious when they subpoena Trump’s tax records. Until then they are just buying time for Republicans to pass a few bills while the President’s signing pen is in the fat little fingers of a putatively Republican figure. We won’t have the evidence necessary to build a legally persuasive case against Trump until the secrecy that shrouds his business dealings is removed.
Trump is an unusual political figure in that he has no politics or ideology whatsoever. The Trump machine runs on two fuels, greed and debt. Understanding his current policy positions and predicting future ones starts with an appreciation of his business and its intricate web of obligations.
The Donald is not the CEO of a corporation in the traditional “Fortune 500” sense, but rather the head of a shady family business of unknown size and scope. He brands himself as a business genius, but it would be valuable to remember that his primary business is real estate development. That’s a critical distinction because real estate, especially on a global scale, operates in ways that are very different from more conventional enterprises.
It is extremely difficult to generate positive cash flow from real estate. Property is, by nature, a slow investment. Large-scale real estate investors usually match one of two profiles. They either people who are more concerned with wealth preservation than with cash flow – usually heirs of a large amount of capital. Or they are wildly corrupt, willing to take advantage of certain unique characteristics of the real estate market for enormous, though often dangerous profits.
What are those “unique characteristics” of the real estate market? First of all, making serious, fast money in real estate usually hinges on aggressive leverage. You make big profits in real estate consistently by investing other peoples’ money and limiting your own exposures. For example, you might borrow huge amounts of money from investors, make poor real estate investments, and pay yourself and key associates exorbitant salaries and bonuses while values decline. Then at some point you either take the business entity into bankruptcy (while keeping the money you made), or you find someone who will take those investments off your hands. We’ll come back to that “someone” later.
Among other things, that model means these businesses are constantly burdened by enormous debt. A crucial criteria for success is the developer’s skill in assembling the rosiest possible balance sheet to attract new capital. Building a brand big enough to distract potential lenders/investors from a close reading of your books can bring handsome dividends. Branding is a vital element of the grift. It attracts the right kind of investors and the right marks on which to dump poorly performing assets.
Whenever the Trumps try to venture beyond property development into a business with normal market constraints, their grimy shtick earns them a big fat failure. From cologne to concrete, it is hard to find a conventional business venture subject to conventional market forces that they haven’t ruined. The Trumps are not very good at businessing, but they are very good at hiding what they do for a living.
What happens when you can’t succeed in normal business ventures and you can no longer distract potential real estate investors from the odor rising from your otherwise rosy balance sheet? You can still make money if you find the right partners, people who are less concerned about your solvency and more impressed with your [ahem] creativity.
What if you found a business where your talent for generating a positive personal balance sheet from negative corporate cash flow became a virtue? Real estate development is a great place to launder money, especially for money that needs to flow across borders. This is where we start to meet the kind of “someone” who is particularly valuable in disposing of junk properties. And this is where the potential ties to Russia become very important to the Republic.
Even in the US, controls on cash investments in real estate are relatively loose compared to the constraints encountered in other investment channels. This creates opportunities. Conventional US corporations and your ordinary, risk-averse American real estate investors are generally reluctant to help corrupt oligarchs and international mafia figures launder money through property deals. It is, after all, a crime, but somebody has to do it.
What respectable American investor is going to help an Azerbaijani oligarch wash investments from the Iranian Revolutionary Guard into normal, legitimate commerce? No one, of course. But the Trumps will do it.
In the midst of the worst real estate collapse in the nation’s history, who is going to take a $40m white elephant off your books at a 100% profit? A Russian oligarch. And what will he do with the property you so carefully “improved” to justify the 100% write-up? Immediately tear it down.
Though Trump repeatedly insists he has no ties to Russia, he has been deeply involved there and maintained extensive business ties to Russian sources since at least the late 90’s. How deep do those ties go? It is impossible to say for sure because Congress, the Republican Party, and American voters have allowed him to keep his business dealings secret.
We do know that Russian investors have been significant funding sources for his projects. We know that Bayrock, a “business” based in Trump Tower with significant investments over the years in Trump projects is run by a Russian-born mafia figure with what can only be described as a “colorful” history. For almost two decades Trump projects all over the globe have proceeded with considerable Russian investment. We know that the family launched its blundering Trump Vodka business from Moscow, where Trump himself was visiting a “Millionaires Fair.” We know he partnered with a Putin-connected Russian oligarch on his smarmy beauty pageant deal in Moscow.
We know that his campaign had a strange, complex, and deep network of ties to Russian intelligence over the course of the campaign. We know that Trump’s Attorney General lied under oath about his meetings during the campaign with the Russian Ambassador, including a meeting that occurred at the RNC. We know that staff members and even family of cabinet members opened back channels of communication with the Russian government during the transition. His campaign manager, Paul Manafort, is wanted for questioning in Ukraine for his business ties to the country’s Putin-backed former president.
We know that the Russians badly wanted Trump to win and leveraged national intelligence assets to help him in the campaign. Basically, we know enough to say with authority that his denials of Russian ties are lies. So, what is he hiding with those lies?
There is the obvious, publicly disclosed explanation for Trump’s Russia lies. He has been compromised by Russian intelligence deeply enough that he does not feel he can act against them or discuss his connections. Salacious details explained in the “Russia dossier” might be true, but they seem too superficial to explain Trump’s slavish adherence to Putin’s agenda or the way he has packed his administration with Putin favorites. It makes more sense to expect that the answer is hiding in the dull ledgers of Trump’s businesses.
This is a Congress and administration that has struggled to accomplish the simplest legislative tasks and been torn to shreds by more complex challenges. But within days of inauguration new legislation was passed that rolled back provisions blocking companies from foreign bribery. On matters of true importance, the Trump administration reliably delivers. Apparently, the ability to bribe foreign officials without consequence is a matter of such concern to this administration that it had to be accomplished immediately while every campaign promise faltered. We should be asking why.
We find ourselves in an unusual situation, one in which our President’s sexual assaults, perjury, housing discrimination, mafia ties, fraud, unapologetic insults to combat veterans, his seemingly endless string of business failures, and his round the clock, effortless and even pointless lying all merge into a distracting static. What would be impeachable ethical lapses in any normal administration are reduced here to distractions. It is of paramount importance that we discover who owns this horrible troll in the White House and neutralize their influence over our government.
Until Congress decides to follow the money, they are just spinning their wheels and playing for time.