• • •
FOR A WHILE, IT appeared Trump was going to have much better luck in Azerbaijan, the Agalarovs’ home country. Although Azerbaijan became an independent nation after the Soviet empire collapsed in 1991, the Agalarov family managed to rekindle the connection with something of a post-Soviet royal wedding between two powerful families. In 2006, Emin Agalarov married Leyla Aliyeva, the glamorous daughter of Azerbaijan’s president, Ilham Aliyev. By marrying into the Aliyev family, the handsome and clean-cut Emin became part of a family well known for its disregard for human rights and repression of free speech, including the jailing of journalists who investigated the regime. Ilham Aliyev had ruled the country since 2003, when he took over from his father, Heydar Aliyev, who had been the dominant political force in Azerbaijan stretching back to the late 1960s.
The Aliyevs ruled the country politically and economically. They were also reputed to be fantastically rich. Although the president’s annual salary was slightly more than $200,000, he controlled lavish properties and businesses. A magazine headline called the family “The Corleones of the Caspian,” a reference to a US diplomatic cable comparing Aliyev’s administration to the powerful mob family in The Godfather movies.
Azerbaijan had long posed a delicate balancing act for the United States, as Washington weighed its security and energy interests against the Aliyev regime’s record on corruption and human rights. The secular, predominantly Muslim nation of 9 million people, bordering Iran and Russia, positioned itself as a pro-Western counterweight to Tehran and Moscow. It was also a major oil- and gas-producing nation and a crucial link in the $45 billion Southern Gas Corridor, a twenty-one-hundred-mile pipeline from Baku to Italy designed to bring Caspian Sea gas to Europe. For Trump, the country seemed ripe for a business deal.
In November 2014, right around the time Trump was sending birthday wishes to his pal Emin Agalarov in Moscow, he announced he would do a hotel deal in Baku with Anar Mammadov, a prominent young Azeri billionaire. Trump would join a project by Mammadov’s company, Garant Holding, to develop the Trump International Hotel & Tower Baku, a sail-shaped structure with 72 “ultra-luxury residences” and 189 hotel rooms. Trump would license his name to the project, which had already been under construction for several years. Trump would also eventually manage the hotel. “When we open in 2015, visitors and residents will experience a luxurious property unlike anything else in Baku—it will be among the finest in the world,” Trump said in a 2014 news release.
Mammadov was a kind of Azeri royalty, a scion of one of the most powerful families in the country. His father, Ziya Mammadov, the country’s longtime transportation minister and a close confidant of President Aliyev’s, was one of the richest men in Azerbaijan, thanks largely to what the US State Department called “corruption and predatory behavior by politically-connected elites.”
Anar Mammadov attended American InterContinental University in London, where he earned a bachelor’s degree in 2004 and an MBA in 2005. Then, almost overnight, he became a billionaire. In the secretive, kleptocratic world of post-Soviet republics, the meteoric rise of the son of an inexplicably wealthy government minister was unsurprising. President Aliyev’s three children owned $75 million worth of real estate in Dubai, including nine waterfront mansions purchased in a two-week period in 2009 in the name of the president’s then eleven-year-old son.
And Anar Mammadov’s companies, or companies related to him, were reported to have profited from contracts worth more than $1 billion for projects related to his father’s transportation ministry.
In 2011, Azerbaijan’s old guard decided that Anar Mammadov was the man the country needed to project modernity and vitality to the world. He started the Azerbaijan Golf Federation and built the country’s first course. He spoke English and was comfortable in Europe and America, so he became the public face of a massive lobbying effort in the United States. Mammadov founded the Azerbaijan America Alliance, which swept into Washington in 2011 like a hurricane of cash. In the next five years, the alliance spent more than $12 million lobbying, wining, and dining Washington policymakers in an effort that Baku’s critics called “caviar diplomacy.”
The alliance held three massive annual gala dinners in Washington to showcase Azeri culture. The first drew almost seven hundred people, including Speaker of the House John Boehner. Mammadov met with dozens of lawmakers, including Boehner, former Speaker Nancy Pelosi, and Senator John McCain, the Arizona Republican. In a push for gravitas in the capital, the alliance hired former congressman Dan Burton, a Republican from Indiana, as its US chairman.
Any concerns about Azerbaijan’s regime currying favor in Washington or cracking down on critics at home did not deter Trump from making his deal. Human rights groups and others had spent years reporting on widespread corruption in Azerbaijan, and the prominent role of Mammadov and his family in the ruling clique turned up in any Google search, but Garten, Trump’s attorney, said the Trump Organization did “due diligence” on Mammadov and the principals in his company before making the deal, “and there was nothing” suspicious. Garten said the licensing agreement between Trump and Garant was signed in May 2012—more than two years before the project was publicly announced. Asked about press reports raising questions about the sources of Mammadov’s wealth, Garten noted they were all from 2013 and 2014. “All of this came to light after the deal had been signed,” he said. Now that the Trump Organization was aware of the reports about Mammadov, Garten said, “These are things that are going to have to be discussed.”
Critics of the Azeri regime saw Mammadov’s role in the Trump deal as tacit approval from the government, and they argued that the property’s success hinged in part on good relations with the country’s top officials. Ganimat Zahid, who was editor of one of Azerbaijan’s main opposition newspapers before he was jailed and then moved to live in exile in Paris, said Trump’s partnership with Mammadov was deeply troubling, if a smart business move: “In the best case, we can say that Donald Trump had to work with one of these guys” to get a deal in Azerbaijan. “But in the worst case, he knew these people were [corrupt] and he didn’t care.”
When Trump announced his hotel deal with Mammadov in November 2014, the same month as the Azerbaijan America Alliance’s third annual gala in Washington, still-booming Azerbaijan looked like a good bet. Garten said Trump was approached by “an intermediary known to both sides” and was “intrigued” by Azerbaijan because it was in “a region that was trying to establish itself.” Marriott, Hilton, Four Seasons, and other luxury hotel chains were investing there, so “that’s something that’s going to be on your radar,” Garten said.
At the time, Baku was a blazing center of development fueled by oil profits. The massive and futuristic Heydar Aliyev Center, designed by the late, renowned architect Zaha Hadid, had opened in 2012, followed by the Flame Towers—three stunning office, hotel, and apartment buildings each shaped like a candle flame—and a massive new airport terminal building featuring a “caviar and champagne” bar.
The Baku Hotel appeared on the Trump website, which promised a 2015 opening. Then, nothing. After about a year, the hotel disappeared from the Trump site. The general manager Trump had hired left for a job in Prague. Construction crews were sent home and the hotel was locked up tight. “We have had an interruption in the construction,” said Khalid Karimli, chief financial officer for Mammadov’s company. He noted that Azerbaijan’s economy was devastated when oil dropped from more than $100 a barrel in 2014 to as little as $30 a year later. The Azeri currency, devalued by the government, dropped to about half of its previous value.
The once-booming city skyline turned into a tableau of blight, with idle cranes perched atop half-finished buildings. Businesses shuttered, thousands lost jobs, and luxury hotels along the waterfront offered five-star rooms at three-star prices. Karimli said construction was about 90 percent complete when the site shut down; he said the hotel would “maybe” open in 2017.
The only key player who
did not lose money on the project was Trump. His deal was not being renegotiated and his fees would not be reduced, said Karimli and Garten, neither of whom would disclose how much Trump was being paid. (On his campaign finance disclosure forms, Trump reported $2.5 million in income from the project between January 2014 and July 2015, and another $323,000 in management fees in the subsequent months.)
At about the same time that the Trump Hotel project in Baku came to an abrupt halt, Mammadov virtually disappeared. Friends said he was living mainly in London. He stopped paying some of his bills. The Azerbaijan America Alliance didn’t hold its annual gala in Washington in 2015. In March 2016, Burton resigned, saying he hadn’t been paid in a year. The next month, after queries from the Washington Post, the alliance’s website was quietly taken down. The Trump Hotel remained “on hold,” Garten said. “Hopefully it will restart, but we don’t know.”
Karimli said Mammadov initially licensed Trump’s name because it was known among political and business leaders in Azerbaijan as well as international businessmen who would be attracted to a five-star hotel in Baku. But now that Trump was running for president, Karimli said, Trump’s name was even more valuable for the Baku hotel project. “It was a good investment and unexpected,” he said with a laugh. “We hope Trump will be elected president.”
• • •
ON JULY 6, 2011, Trump flew to Panama City to inaugurate his Trump Ocean Club International Hotel & Tower, his first overseas property to open its doors. “Whoever said less is more never had more,” boasted the marketing material for the seventy-story complex of hotel rooms, condos, restaurants, offices, and a casino—all part of the tallest, most unapologetically Trumpian building in Central America. Trump beamed for the paparazzi in a dark suit, white shirt, and fireball-red tie, with a beauty queen on each arm—on his left, Miss Panama 2011, and on his right, Justine Pasek, a Panamanian beauty who had taken the crown at Trump’s Miss Universe pageant in 2002.
Trump’s appearance said all the right things about a steamy tropical nation whose primary claim to relevance had always been its narrowness, which allowed for construction of the fifty-mile Panama Canal connecting the Atlantic and Pacific and revolutionizing ocean shipping in the Western Hemisphere. To Panamanians yearning for a world-class capital, a big gold TRUMP etched on a sail-shaped tower on the waterfront meant that Panama City, increasingly known as the fast-living Miami of Central America, had arrived.
Now Trump stood beneath the hotel’s soaring ceilings, fawned over by beauty queens and dancers in traditional Panamanian costume. President Ricardo Martinelli—a supermarket tycoon who would flee a few years later to Miami amid allegations of vast corruption—thanked Trump for selling Panama the five letters it craved. Trump had warm words for Martinelli, too, suggesting that Panama’s newfound glitz could bring even greater rewards: “Maybe the president will get us to bring Miss Universe back here.”
But as the ceremony ended, the skies opened and the entire Punta Pacifica neighborhood—notorious for its chronic poor drainage—flooded. Trump was stranded for nearly an hour. The president was called. Cars were stuck in the flooded streets. Finally, someone sent a big SUV to rescue Trump. Nothing was going to be easy for the Panama hotel.
The hotel on the Panama City waterfront was meant to be Trump’s springboard into the world of international real estate development. “This building is a very important bridge for us as we begin to expand internationally,” Ivanka Trump said on a tour of the property in 2011. The Trump family had first noticed Panama’s possibilities, she said, when Panama City hosted the Miss Universe Pageant in 2003. Developer Roger Khafif, who had immigrated to Panama from Lebanon three decades earlier, invited Donald Trump to join the Panama City project. Before the Trump deal, Khafif had done a few successful projects, but mainly, he said, property development “was a hobby.” In about 2002, he paid $2.7 million for three acres of newly created land along the Panama City waterfront. Khafif saw it as his chance for the kind of score he’d never had: a massive complex with hotel, 630 condominium units, office space, retail shops, and casino. Over the next couple of years, he had plans drawn up, evoking the sail shape of the famous Burj Al Arab hotel in Dubai.
To land the $230 million or so in financing required to build the complex, Khafif needed a name, a brand as big as his ambitions. “In those days,” he said, “Trump was the brand.” So Khafif wrote a letter explaining his project and sent it to Trump’s New York address. No response. Khafif said that the letter “probably went to the trash,” and that Trump was likely asking himself, “What the hell is Panama?” But Khafif didn’t give up. In 2005, through a friend of a friend, he finally landed a meeting with Trump.
Khafif flew to New York and went to Trump Tower, carrying his drawings, market analysis, financial projections, and a short video about Panama and the project. Khafif argued to Trump that Panama was the perfect, safe, US-friendly environment to attract well-heeled American retirees, and that Trump’s brand would be a huge draw. “He asked the questions,” Khafif said. “We showed him the drawings. We talked about Panama. We showed him a little movie.” Ivanka Trump joined the meeting. Khafif said he was not asking Trump to invest, just to let him purchase the rights to call it a Trump project. The Trump name, Khafif was sure, would get him the financing he needed.
Trump thanked him for coming in, and Khafif left. The next day, in Miami, Khafif’s cell phone rang. The caller asked if he would hold for Trump. Khafif thought a friend was playing a joke on him, until he heard Trump’s voice. “Roger, I’m excited. I really love that thing,” Trump said. “I want this for Ivanka.” Then just twenty-four, Ivanka was taking a bigger role in the company, and Trump wanted the Panama project “to be her baby.” The timing was perfect: Trump wanted to expand outside the United States. And the Panama project promised to be huge, the largest of its kind in Central America, “a Trump-sized project,” as Khafif put it.
With the Trump name attached, Khafif went to Bear Stearns in New York and landed a $220 million bond deal. Without Trump’s name, he said, he would never have been able to get that money. Trump’s name also allowed Khafif to raise the price of his apartments to more than $3,000 per square meter—more than three times what nearby condominiums were charging.
Khafif and two other people in Panama familiar with the details of the project said the original deal gave Trump about $75 million from licensing fees and a share of each condo sale. In addition, Trump’s organization would earn a fee for managing the hotel. By 2016, Trump had earned about $50 million on the Panama deal, according to two people with knowledge of the project. Trump himself reported revenue of “over $5 million” in royalties and more than $896,000 in management fees from the Panama project between January 2014 and July 2015. In the nine months thereafter, he reported revenue from the Panama deal of between $1 million and $5 million in royalties and another $1.28 million in management fees.
The money kept flowing, even as the Panama property generated a powerful wave of bickering and litigation. Problems started almost immediately after Trump’s flashy ribbon-cutting in 2011. Within two years, Khafif’s company had filed for Chapter 11 bankruptcy protection, and a court approved a debt-restructuring deal. Khafif said the global economic downturn had caused condo sales to dive. Buyers who had already paid deposits couldn’t afford to close their deals as mortgages became harder to find. Although about 90 percent of the condominium units had been under contract, Khafif said more than half of those buyers couldn’t complete their deals and had to forfeit their 30 percent deposits—a total of about $50 million.
Even after the bankruptcy deal, problems persisted, boiling over in 2015. Trump managed not only the hotel, but also the condominium portion of the building. There, Trump’s company paid $100 for Room 1502, a 170-square-foot storage closet on the fifteenth floor, which was used mainly for utilities. Under Panamanian law, that tiny foothold made Trump’s managers eligible to serve on the condominium’s board of directors. In 2015, members of the
condo board who were not in Trump’s employ revolted over what they called mismanagement by Trump’s local managers. The owners claimed Trump’s managers had overspent the condo board’s budget, given themselves undisclosed bonuses, and improperly mingled the finances of the condo and the hotel to make the hotel look more profitable. The Trump Organization consistently denied those allegations.
Khafif and two other sources said Trump’s managers proposed imposing a onetime levy of more than $2 million on the condo owners’ association to cover the budget shortfall. Angry board members refused to apply the fee and demanded the resignation of Trump’s top official in Panama, Mark Stevenson. After the meeting, Stevenson quit as board president, and the other owners took charge of the board. The new board demanded the return of more than $2 million they alleged had been improperly spent. Trump’s lawyers responded by demanding that the unit owners pay Trump a $5 million termination fee. Then Trump filed a claim of at least $25 million against the owners, saying they had fired his management team illegally. Trump, already a candidate for president, tried to keep the claim quiet by filing it with a confidential, Paris-based arbitration court, but the case was disclosed by the Associated Press.
Outgunned, the board backed down and settled the case. Two people familiar with the resolution said both sides agreed to walk away from their claims. People on both sides said they were forbidden from disclosing details, but Garten said that the case ended “amicably” and “I don’t think anyone was bullied; we had the right to protect our interests and we did.” The settlement included another frequent Trump tactic: the nondisclosure agreement. A condo owner said restrictions in the agreement prevented him from speaking publicly and that he feared that Trump might sue him for a sum that could ruin him. Stevenson, Trump’s former top manager in Panama, declined to comment because he had signed an agreement not to talk publicly for at least a year. He said violating that agreement could cost him substantial amounts of money that Trump still owed him.
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