The Financial Times published the results of a 10-month investigation into the sources of funding for the Trump International Hotel and Tower Toronto, which was built from 2007 to 2012. The findings of the investigation are based on legal documents, court statements and more than two dozen interviews. They show how this project "connects [the current] US president with the shady post-Soviet world, where politics and personal enrichment went hand in hand," writes the FT.
Some of the financial transactions identified show how Donald Trump earned money raising, whose origins may be questionable. They also raise questions about whether the head of the White House could be vulnerable to the influence of the external forces informed about them because of his past business operations (especially since he did not get rid of the shares in the dozens of companies that make up the Trump Organization in violation of the presidential tradition) . Among such transactions, there may be a secret payment by Trump Toronto's Trump business partner "$ 100 million to a Moscow" solution "representing Kremlin-backed investors," writes FT: "This payment was part of a series of transactions that brought millions of participants to the Toronto project, in turn, brought millions to the future president. "
Trump's partner in Trump Toronto was Alex Schneider, whose family emigrated from the USSR and in 1982 settled in Toronto. Schneider quickly became one of the richest people in Canada - by the age of 36, in 2005, he had already been listed as billionaires of Forbes with a fortune of $ 1.4 billion. His business empire with annual revenues of $ 4 billion stretched from Yerevan to Toronto, he wrote then Forbes, listing assets, including: control over Zaporizhstal, the fourth largest steel company in Ukraine, a steel company in Volgograd, an electricity grid in Armenia, assets in Israel, Turkey, Serbia, an office building and a casino on Arbat in Moscow. All these assets were part of the holding company Midland Resources, registered on the island of Guernsey.
Cases of bygone days
The investigation of FT goes back to Soviet times, showing how people who established ties with the KGB, with politicians of the late Soviet and post-Soviet periods, could use their help to earn fortunes. How to make money on the transition from socialism to capitalism, Schneider in the early 1990s. showed another settled in Canada Soviet emigrant Boris Birshteyn, whose daughter Schneider subsequently married. Birshtein was one of the few businessmen who were allowed to penetrate from the West for the Iron Curtain, writes FT. "I have been doing business with the Soviet Union for many years," Birshteyn said in an interview in 1993. "I started with Brezhnev and somehow managed to take a unique position in a certain sense, I met many people and brought friendships with many very influential people ".
In May, the FT spoke with a former KGB officer who, in the 1980s, worked in the apparatus of foreign intelligence. He told how the Communist Party and the KGB tried to hide money abroad when the USSR collapsed. He also said that in the late 1980s. Birshtein was one of the Western businessmen associated with people from the KGB who were engaged in international business projects of the committee. In 1991, the company Birsteina hired for a year member of the CPSU Central Committee Leonid Veselovsky as a consultant on economics. But Veselovsky, a former KGB officer told the FT, was also a senior official of the KGB's foreign intelligence service and "the organizer of money laundering by the committee." (To find Veselovsky to receive comments FT failed, according to a former KGB officer, he "disappeared without a trace.")
The statement that Birshteyn was an "operative" of the KGB was "absurd" and "knowingly false," his lawyer told the FT.
Birstein and Schneider began active joint activities in Ukraine, in particular, engaged in metal trading. "Boris did a lot for him," the former manager of Midland, a holding company of businessmen, told the newspaper. - [Schneider developed the business] on the basis of what Boris created for him. "
"Birshtein gave Schneider some shares in the Ukrainian steel business," Eduard Shifrin, who became a business partner of Schneider after Birshtein, who left Midland in 1996, wrote in a testimony in 2017. In 2016, Shifrin filed an arbitration suit against Schneider in London.
At first, Birshtein and Schneider resold Ukrainian metals abroad (that is, they were for Ukraine about the same as at the same time for Russia - the Ruben brothers). And then during the privatization Schneider and Shifrin bought a stake in Zaporizhstal, paying only $ 70 million in 2001. After five years, it will be estimated at almost 10 times more expensive, the FT notes. Banker Vadim Grib, who headed another consortium of investors, told the newspaper in Kiev recently that the competition was unfair: the authorities of Ukraine patronized Midland, giving it the status of a strategic investor. Communications were a key factor, FT Vasil Khmelnitsky, who was a partner of Midland at the tender, confirmed to FT: "Fifteen years ago, to be a successful businessman, it was necessary to have access to those in power."
Schneider and Shifrin expanded their business, including in Russia. The Volgograd metallurgical plant "Krasny Oktyabr", bought in 2003, was "one of the few remaining in Russia that produced armored and reinforcing steel necessary for the defense sector," said FT Mathieu Buleg, an expert at London's Chatham House. In his opinion, in order to get permission for such a deal, it was necessary to have good connections in the Russian military leadership.
Where's the money from?
In 2007, Schneider and Trump, under the flash of cameras with golden shovels, began digging a trench for Trump Toronto at the ceremony to begin the construction of a skyscraper worth 500 million Canadian dollars ($ 380 million at the current rate). By 2010, the construction of the building with 261 hotel rooms and apartments was due to end, but it was delayed. In October, Schneider allocated $ 40 million for the project. In subsequent years, Trump will receive at least $ 4 million in royalties and management fees (Trump Organization was the operator of the building); most likely, much more, the FT notes, because the financial information disclosed by Trump as a candidate and president only covers the time since 2014. "The documents that FT acquainted raise serious questions about how Schneider's company earned money during the period before the decision to invest these $ 40 million in Trump Toronto ", - the newspaper writes.
In October 2010, Schneider and Shifrin finally divided the business. The fact that the first to withdraw assets in Canada, including Trump Toronto, the Dominican Republic and Israel, and the second - the Russian, they agreed in 2008. On assets in other countries, in particular for Zaporizhstal, there was no decision; but in 2010 they sold it.
In May 2017, The Wall Street Journal reported with reference to informed sources that the Russian VEB, which also provided them with funds, initiated the deal to buy unknown shares of Midland's stake in Zaporizhstal by unknown buyers. A part of the money Schneider sent to the completion of Trump Toronto. But until now it was not known that Schneider and Shifrin secretly paid $ 100 million in commissions that could be transferred to Russian officials, writes FT.
Zaporizhstal was interested in Korean Posco, Roman Abramovich, Alisher Usmanov, as well as Ukrainian businessman Rinat Akhmetov, the main owner of the Metinvest group, Ukrainian media wrote in late May 2010. A pool of Russian investors led by VEB allegedly offered $ 1 for the entire plant , 7 billion, interrupting the offer of Akhmetov. In July, it became known that for its share of 48% of Midland received through the "Three Dialogue", involved in the organization of the transaction, $ 850 million. This figure appeared in the materials of the High Court of London, where Akhmetov applied for compensation for the failure of the deal with him. In January 2011, the MetalBulletin trade publication, citing materials from the London court, reported that the buyers were Atinia Ventures, Parborio Holdings, Belego Holdings, Sileni Trading and Equalchance Processing. Who is behind them, is still not known.
The deal under pressure, the recommender and decided
In May 2010, Shifrin called Schneider from Moscow, writes the FT, based on the documents examined, including testimony of former partners in arbitration between them in London. According to Schneider, Shifrin said that buyers acting on behalf of the Russian government want to buy a stake in Zaporizhstal and are pressured to sell it to Midland. According to Schneider, Shifrin told him that in Moscow this deal was viewed as "politically strategic". In his testimony, Schneider writes that a high-ranking Russian official "in very clear terms" told him to carry out this deal, and if not, his Russian assets will be in jeopardy.
FT acquainted in Cyprus and the British Virgin Islands with the documents of companies to which Midland sold a stake in Zaporizhstal. Proceeding from them "there are serious reasons to believe that VEB itself paid the entire purchase price and eventually gained control over Midland's stake in the steel company," writes FT. The chairman of VEB's supervisory board was the then Prime Minister Vladimir Putin, and Russia before the Ukrainian events in 2014 was already increasing its economic presence in eastern Ukraine, gaining control over industrial assets directly or through friendly oligarchs, the newspaper said. VEB refused to comment.
Midland received from the buyer at $ 160 million more than offered Akhmetov. But, according to the documents examined by the FT, of these $ 160 million to pay Akhmetov for a break in the preliminary agreement with him were to go $ 50 million, $ 10 million was destined for Midland itself, and the remaining $ 100 million had to be sent through front companies in Cyprus and elsewhere those whom Schneider referred to in the court documents as introducers - the recommenders who represented the buyers and organized the transaction.
The man who organized it, according to the judicial evidence of Shifrin, was Igor Bakai.
Bakai was a former head of the State Administration of Affairs of Ukraine, the founder and the first head of Naftogaz. After the Orange Revolution, in 2004 he left for Russia, where, as the FT writes, he became "decisive". By 2010, according to Shifrin's judicial testimony, Bakai "had good political ties at the highest level" and fronted the deal with Zaporizhstal.
The most important question, the analysts told the FT, to which she applied for advice - what happened to this commission of $ 100 million. "Did the illegal enrichment of Russian officials contribute to the deal, which ultimately ensured the receipt of millions [of dollars] by the future US president?" issue newspaper.
Such "substantial" commissions "may seem unusual compared to business operations in the West, but while doing business in Russia and Ukraine, Midland paid various commissions, and this is standard practice," Shifrin testifies. He also adds: "I do not even know if these commissions were intended solely for" Bakai or also "for other recipients" whom he represented. Schneider in his testimony in the arbitration case writes that under the pretext of transferring secret commissions Bakai Shifrin transferred money to himself. However, he also claims that around the time the deal was being conducted, Shifrin told the manager of Midland in Moscow that he needed money "to pay off officials in the Kremlin." (Shifrin denies that he said that.)
In the statement of Bakai, available in the arbitration case, it is said that he did receive the money. Asked by the FT whether he confirms that statement, Bakai answered that he is under house arrest for another case and is forbidden to talk to the media (he is accused of stealing 630 million rubles from Metalloinvest Alisher Usmanov).
Shifrin in October 2016 (on the eve of Trump's victory in the elections) received Russian citizenship, notes FT.
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Several people familiar with the deal on Zaporizhstal offered the FT different versions of where $ 100 million went. But each of them raises serious questions about the activities of Trump's business partner. The documents analyzed by the FT leave no doubt that Schneider signed a payment of $ 100 million, realizing that the money will go to people representing the interests of the Kremlin, notes FT.
According to Tom Keating, a former JPMorgan banker who now specializes in financial crimes at the Royal United Defense Research Institute (RUSI) in London, if a payment of $ 100 million was considered a bribe, then the cash flow through Schneider to Trump Toronto could mean that "Trump Organization receives funds of criminal origin and, thus, is used for money laundering. " According to experts, any legal risks for Trump and his business will depend on whether he knew the Trump Organization leadership - or should have known - about the origin of partner money.
One of the former partners of the Trump Organization, who asked not to disclose his name, calls her approach to due diligence ("business partners") "deliberate forgetfulness." "Donald does not conduct due diligence," last year led Bloomberg to the words of Abe Wallock, who held a high post in the Trump Organization.
"Russia has long been associated with dirty money," said Eliza Bean, a member of the US Senate Investigation Committee and involved in several money laundering investigations. "Anyone who receives substantial funds from the former Soviet Union should know that this money is risky and requires careful verification to make sure they are clean," she says.
Schneider and Shifrin refused to comment on the FT article.