← The Political Scene | The New Yorker
The Political Scene | The New Yorker
Trump International
00:16:49
This week, in The New Yorker, Adam Davidson wrote about Trump Tower Baku, a project in which the Trump Organization collaborated with corrupt Azerbaijani officials who had ties to Iran's Revolutionary Guard. Adam Davidson joins Dorothy Wickenden to discuss what the Baku deal reveals about how Trump does business abroad.
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- [00:00]
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- [01:17]
Dorothy Wickenden
This is the Political Scene, a weekly conversation with New Yorker writers and editors about Politics. It's Friday, March 10th. I'm Dorothy Wickenden, executive editor of the New Yorker. The precise nature of Donald Trump's international business deals can be hard to pin down after the election. On January 11, during a press conference to announce how, as president, he intended to avoid potential conflicts of interest with the Trump Organization, he couldn't resist a quick aside.
- [01:44]
Donald Trump
Over the weekend, I was offered $2 billion to do a deal in Dubai with a very, very, very amazing man, a great, great developer, and I turned it down. I didn't have to turn it down because, as you know, I have a no conflict situation because I'm president, which is. I didn't know about that until about three months ago, but it's a nice thing to have, but I don't want to take advantage of something.
- [02:12]
Dorothy Wickenden
Adam Davidson joins me to discuss a deal that Trump did pursue, the stalled Trump Tower in Baku, Azerbaijan, and what it reveals about how he conducted business abroad. Hi Adam, welcome back.
- [02:24]
Adam Davidson
Hey, Dorothy. Great to be here.
- [02:26]
Dorothy Wickenden
The headline on your story in this week's New Yorker is Donald Trump's worst deal. The piece describes his ties to Zia Mamadov, Azerbaijan's transportation minister and one of its most powerful oligarchs. You suggest that Trump may have violated the Foreign Corrupt Practices act by lending his name to Mamedov's Baku Tower. Lay out that case for us.
- [02:48]
Adam Davidson
Sure. So Zia Mamamadov, who until two or three weeks ago was transportation minister, is one of, depending on how you count three or four or five of the big oligarchs in Azerbaijan. Azerbaijan was this Soviet republic, one of the poorest, least attended to backwaters of the Soviet state. But then after independence, post Soviet Union, it became wildly rich. Hundreds of billions of dollars pouring in because they had found offshore oil and gas in the Caspian Sea. And these hundreds of billions of dollars poured in. And one of the main places they went was infrastructure, roads, rail. And we now know that Zyamadov ran all of that, the roads and the rail. And under his tenure, Azerbaijan's roads were the most expensive to build. An average of $18 million a kilometer, way, way more, many multiples of what it is in any other country. And he's pocketing some huge amount of it, famous and naked. This is a country where nobody's pretending they're not corrupt. This isn't a subtle thing, it's blatant. And the Trump Organization decided to do a deal for Trump Tower Baku with a group of shell companies, three shell companies that are technically run by one's run by Zima Madoff's son, another by his brother, and a third by his former driver. But it's widely understood that these are all companies that really are zemamotovs.
- [04:20]
Dorothy Wickenden
What did you know about this deal? It had been written about a little bit. And what made it stand out to you as particularly suspect among Trump's many deals worldwide?
- [04:30]
Adam Davidson
I think like many people, I had just a general sense that there seemed to be sort of an opportunism, a kind of partnering with sketchy people throughout the Trump Organization. But I found myself just asking the question, how do these deals actually work? How does the decision making process work within the Trump Organization? How do they relate to their partners? And I felt like the only way to answer that was pick one deal. And I started reading about Baku, and as soon as I started reading about it, I was like, wow, this deal makes no sense. There is no way a well run risk managing firm with proper due diligence would ever do this deal. So this will reveal a lot about how that organization worked.
- [05:15]
Dorothy Wickenden
While you were reporting in Baku this past December, Trump suddenly extricated himself from the deal along with two others, one in Georgia and one in Brazil. Was that because these three were under particular scrutiny at the time?
- [05:28]
Adam Davidson
Well, the official statement from the Trump Organization is these partners hadn't paid their, you know, what they owed to the Trump Organization. So it was simple house cleaning. However, it's very striking that the three deals they killed were coincidentally the three deals I had identified as the most controversial, the ones it seemed most likely they wanted to wipe off the table.
- [05:49]
Dorothy Wickenden
So tell us what you found in the ad. Talk a little bit about the Foreign Corrupt Practices act and what was going on there.
- [05:55]
Adam Davidson
So it's been illegal since 1978 for an American company or a company, even foreign companies, that have a strong US Presence, to be part of a scheme to bribe a foreign official in exchange for benefit. And bribery is defined as money, obviously, but also anything of value, any way in which you transfer value. This was a fairly sleepy law, maybe one or two prosecutions a year through the 90s, but after 9 11, in part because of 9 11, and in part, just coincidentally, it became a much more aggressively pursued law. So there are, you know, many dozens of cases a year. And it has completely transformed corporate America. To me, it's something for us to be very proud of that the US has really led a global effort against corruption and bribery. Generally, bribery from American firms is not done directly. So it's very rare for there to be a CEO of a big American company or something going overseas and paying money to a foreign corrupt leader. It's generally a partnership with someone else or hiring an agent or working a local distributor, something like that, where the American company keeps the corruption at arm's length. They don't ask questions. And so most foreign corrupt practices prosecutions and investigations are not, when did the American pay a bribe? It's how did they set up a complex deal so that a bribe could be paid or other services rendered to a foreign official without the American company having to explicitly be complicit? And that is exactly what happened in this case.
- [07:39]
Dorothy Wickenden
You know, Trump said, you quote him in the piece, saying it's a horrible law, talking about the Foreign Corrupt Practices act and it should be changed. We're like the world's policemen. It's ridiculous.
- [07:49]
Adam Davidson
Yes, and he has this very strong view that I would say was completely common in the late 70s and early 80s when this law first came out. I think that many American companies were shocked that it's Suddenly illegal in America to bribe someone in another country. But that norm has complet shifted. Now, you hear that from time to time, but you don't hear it as blatantly and explicitly as.
- [08:10]
Dorothy Wickenden
And knowing that, knowing that this could be an offense that could be prosecuted, why would the company not have done the due diligence that you would assume most corporations do before engaging in this kind of arrangement?
- [08:22]
Adam Davidson
Yeah, and I do really want to emphasize that this is not normal behavior. The Trump Organization is an extreme outlier in American businesses for its comfort in doing business with corrupt officials and partaking in complex financial schemes. Seem to be designed, possibly, we don't know for sure, designed to abet corruption. I would say that when you have a president or CEO of a company who is against the law and doesn't think it's legitimate law, and when you have a general counsel, as the Trump Organization has, that believes that so long as they are in the licensing business and receiving money from overseas and not paying money overseas, they're immune from prosecution. And that is their belief. They alone have that belief. I have not found anyone else who's an expert in this law who believes that, but they believe that. And I think when you believe you're immune from a stupid law, you probably aren't gonna be the most aggressive in trying to be in compliance with that law.
- [09:18]
Dorothy Wickenden
Yeah. So I wanna quote Alan Garten. You talked to him at length about exactly this and he was the company's chief legal officer and he told you about the hotel. We didn't own it. We had no equity. We didn't control the project. The flow of funds is in the wrong direction. We did not pay any money to anyone. Therefore it could not be a violation of the fc.
- [09:38]
Adam Davidson
And I feel convinced he truly believes that literally nobody else. I found and I looked, I asked him to find somebody who agreed with him and he couldn't find someone who agreed with him. That is a dangerous. We don't have a system in which companies or individuals get to make up their own interpretation of a law and live according to it. But one of the many lessons I learned, or I believe I learned, about the Trump Organization is there is this insularity. This shouldn't be surprising to anyone who's witnessed the White House. There is a sort of inward looking culture where they define norms for themselves and they believe those norms apply generally. And I would say that is not best practice in most companies. You want a strong internal culture, but you also want some interaction with outside authority.
- [10:29]
Katie Drummond
I'm Katie Drummond I'm Wired's Global Editorial director.
- [10:32]
Adam Davidson
I'm Michael Kalauri, Wired's Director of Consumer, Tech and Culture.
- [10:36]
Dorothy Wickenden
And I'm Lauren Good. I'm a senior correspondent at Wired. And our show, Uncanny Valley, is about the people, power, and influence of Silicon Valley.
- [10:45]
Katie Drummond
And right now, Silicon Valley and Washington have never been more intertwined. So each week, we get together to talk about a big story, often at the intersection of tech and politics.
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Adam Davidson
Right. So whether we're talking about Trump, Coin, Doge, or Elon Musk, we will always explain how these Silicon Valley forces are.
- [11:02]
Katie Drummond
Affecting Washington and how they affect you. Make sure you're following Uncanny Valley in your podcast app of choice so you don't miss an episode.
- [11:14]
Dorothy Wickenden
In the last few weeks of reporting, you made one of those discoveries that make reporters very happy, which was financial ties between the Mamedov family and Iran's Revolutionary Guard. And you found that the Trump Organization had been aware of that since 2015.
- [11:31]
Adam Davidson
Yeah. So what had been known since 2010? And the first big cable WikiLeaks dump, there was this sort of vaguely written cable by an American diplomat in Azerbaijan saying, zia Madov has ties to the Revolutionary Guard through these two brothers, Kemal and Kumar Zarvashi. And it didn't really go into much detail. It said they worked on road construction together, and that had been covered by Mother Jones, the Washington Post, the AP did a big story, but nobody took it forward. And it turned out for all sorts of reasons, it was very hard at first to get information on these Darvishy brothers. So I did eventually find one of the Darvishy brothers website, and there was a bunch of stuff in Farsi. And I just knew one of the things I need to do is hire a Farsi translator and just have that person go through the website. But I assume no one's putting on a public website incriminating information. And so we finally got Farsi translator, who quickly identified that the website itself began to show a link to some other companies. And we quickly were able to establish fairly solidly that these Darvishee brothers were not just veterans of the Revolutionary Guard or possible veterans of the Revolutionary Guard. They were active fronts for the Revolutionary.
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Dorothy Wickenden
Guard, which has, by the way, been accused by the United States government of being involved in drug trafficking, money laundering, sponsoring terrorism.
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Adam Davidson
Absolutely. And in fact, the Trump administration is trying to dramatically increase their designation from a sanctioned entity to a terrorist entity, which would be a dramatic elevation in how the US Government interacts with them. So basically, this bit of reporting that I was able to uncover showed that Zia Madoff, at a time when he was spending hundreds of millions of dollars on the Trump project and other projects, one of his chief partners was the Revolutionary Guard or a front company for the Revolutionary Guard. And we don't know. It's possible that Zimaminov walled off that part of his business completely from the Trump part of his business, although nothing about Zimaminov suggests that kind of scrupulous accounting standard. So it seems at least worth asking the question, it seems at least very possible that Trump directly received money that was originated with the Revolutionary Guard.
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Dorothy Wickenden
Why would the organization have gone forward with this, with all of these liabilities? Was the Trump Organization in arrears at the time when it entered into this deal?
- [14:10]
Adam Davidson
I have a few hypotheses that I don't. I mean, based on evidence, but I don't know which one is correct. So one is simply, as Donald Trump himself has said many times, it's a company built on gut feel and passion, and they just decided, hey, I want to do this deal. Another hypothesis is it's a company that was so heavily debt financed that there are just periods where they desperately need a million or two dollars and they're willing on those days to take on risks. And so it's possible that there was a period in 2012 when they signed this deal, the company was in trouble. It was after the financial crisis. They just needed $2.5 million, and it was worth taking on dramatic long term risk.
- [14:50]
Dorothy Wickenden
One of the promises that Trump made was to run the country more like a business. But what have you learned, broadly speaking, about the kind of business that Trump runs?
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Adam Davidson
So forgive me for going here, but when you study why America became the richest country in the history of the world, what economic historians, business historians, point to is the transformation of business somewhere between the 1880s and 1920s from family business to institutionalize business. Businesses that exist outside of just a bunch of family members that created systems and risk management and all sorts of things that seem really boring, but are the engine of American economic growth were transferred to the rest of the world, became the engines of global economic growth. And the Trump Organization in so many ways feels like a throwback to the 19th century. It's a company in which every key decision has to be made by someone whose last name is. It's a company where what projects go ahead and what don't, who is elevated, who isn't, is entirely rooted in the gut senses of some family members. And this case is such a model of why you don't want that kind of system in a global business concern. I mean, the point of business is having capital, thinking about the future, having a view for the future, managing risk. You can never eliminate risk. You don't want to eliminate risk, but managing risk in a thoughtful way. And this deal, aside from the morality, forget he's president, Pretend we don't care about corruption or terrorist financing. From a pure business standpoint, this was a deal where, for whatever set of reasons, they took on enormous exposure. I mean, the fines for this would be hundreds of millions of dollars. And that is not how you run a business.
- [16:45]
Dorothy Wickenden
What are the chances, do you think, of a prosecution, given the Justice Department that we have in place?
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Adam Davidson
There are two big barriers to a prosecution. So one is it is a really tough case. And I don't want to make it seem like it's a slam dunk case because it is one thing to write an extremely fact checked, accurate article, but it's a whole other thing to actually bring charges. You know, to actually have a prosecution, we'd need, you know, checks and pay stubs and deposits and, you know, they'd have to make tax returns. And so you can't prosecute. With my article, you'd need to do a lot of work. And that work would involve going to Azerbaijan, convincing the Azerbaijani government to go against the US President. Azerbaijan's political and economic future is entirely tied to the American system. You'd also need Iranians to participate in an American prosecution. Maybe they would since it's Trump. But it would be challenging and it would be a tough case even if he wasn't president. It is a tough case. So that's one barrier. Barrier number two is foreign corrupt practices. Unlike almost any other federal crime, the decision to prosecute is made by what they call main justice. That means the bureaucracy in D.C. controlled by Jeff Sessions, the Attorney General. And I mean, I don't expect that to happen. I do think there's at least a chance that once there's an independent prosecutor, and I now think that has to be inevitable. I think there's so much demand for it that this will become part of what they look into. I don't know how it couldn't be.
- [18:12]
Dorothy Wickenden
Thank you so much, Adam.
- [18:13]
Adam Davidson
Thank you, Dorothy.
- [18:15]
Dorothy Wickenden
Adam Davidson, the co founder of NPR's Planet Money, is a staff writer for the New Yorker. This has been the political scene. You can subscribe to this and other New Yorker podcasts by searching for the New Yorker in your podcast app. And find more political analysis and commentary on newyorker.com feel free to rate and review the political scene on itunes. This podcast is produced by Alex Barron for newyorker.com with help from Daniel Wenger. I'm Dorothy Wickenden.
- [18:49]
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Donald Trump
But what's happening in America isn't just the cause of global upheaval. It's also a symptom of disruption that's happening everywhere.
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I'm Asma Khalid in Washington, D.C. i'm.
- [19:04]
Donald Trump
Tristan Redman in London. And this is the Global Story.
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Every weekday, we'll bring you a story from this intersection where the world and America meet.
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Donald Trump
Listen on BBC or wherever you get your podcasts from.
- [19:22]
Adam Davidson
Prx.