The Trump Organisation could be liable for prosecution under the Foreign Corrupt Practices Act (FCPA) for its business deal with Azerbaijan's Garant Holding, according to an expose by The New Yorker. Its report also alleges that the deal put the organisation in indirect contact with the Islamic Revolutionary Guard Corps (IRGC), the Iranian religious armed force.
In 2012, the Trump Organisation reached an agreement with Zqan Holding, a business conglomerate owned by Anar Mammadov, to franchise the Trump brand to a sail-shaped building in Baku. Mammadov is the son of the former Azerbaijani transport minister, Ziya Mammadov, a man that leaked US embassy cables described as being corrupt even by Azerbaijani standards.
Banking on the father's position in the government, the Mammadovs built a business empire with operations in real estate, transport and hospitality, among others. In 2013, Zqan Holding was renamed Garant Holding. The family appears to have fallen out of grace with the ruling elites in Azerbaijan in recent years, as Anar moved to London and Ziya was fired from his position in February, after almost 14 years at the helm of the transport ministry.
The Trump Organisation reportedly received as much as $3mn from franchising its name to a luxury Trump hotel that the Mammadovs built. In October 2014, Ivanka Trump visited Baku and reportedly personally monitored the interior decoration in the hotel.
Furthermore, the report of The New Yorker claims that the Trump Organisation and Zqan Holding signed a technical-services agreement, which is "often a nominal addendum to licensing deals".
President Donald Trump has sought to distance himself from Ziya Mammadov, who is not officially among the holding's shareholders or management. Passing property off to close family members is a common practice among government officials in Azerbajan, where it is illegal for them to own private businesses. However, according to the New Yorker, it appears that the organisation dealt with Elton Mammadov, Ziya's brother and an MP, directly, and that this could open it up to a possible suit in the US under the Foreign Corrupt Practices Act.
According to the FCPA, it is illegal for companies with offices in the US to enter into business ventures with foreign companies that are suspected of corruption, or with foreign government officials that may be abusing their official powers for personal enrichment. Over time, the FCPA has been used to contain American corporations' foreign corrupt deals. ExxonMobil is a well-known case in this area. It is currently subject to a US federal government investigation over a major oil deal it made with the Nigerian government.
The Trump Organisation's contract with Zqan Holding could be problematic for the company and the US president because of the Mammadov's business deals with the Darvishi family of Iran, which is associated with the IRGC. The New Yorker claims that at least three of the Darvishis - brothers Habil, Kamal and Keyumars - are associated with the religious military force, which also owns some of the largest businesses in Iran.
It is customary for wealthy Iranian families to have ties with the IRGC, which also uses its religious authority to derive financial benefits.
President Trump was CEO of Trump Organisation when the Azerbaijani deal was concluded. However, he would have to be impeached before a lawsuit is brought against him. The organisation rescinded its contract with Garant Holding in December, together with a number of other foreign deals that could prove controversial or expose the then-president-elect to conflict of interests.
As per the terms of another agreement in the Caucasus with Georgian company Silk Road Group, the Trump Organisation was to franchise its brand to a $250mn real estate development in the Black Sea resort of Batumi. Former Georgian President Mikheil Saakashvili, who touts himself as a friend of the magnate-cum-president, reportedly mediated the agreement. The Trump Organisation also cancelled this contract in early January.
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