Trump moves to cancel deals in Azerbaijan, Georgia

AP News
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Posted: Dec 16, 2016 6:33 PM
Trump moves to cancel deals in Azerbaijan, Georgia

NEW YORK (AP) — The Trump Organization has canceled a licensing deal for a hotel in Azerbaijan and is taking steps to do the same for a project in neighboring Georgia, part of recent efforts by the president-elect to extricate his business from thorny relationships five weeks before he takes office.

Both projects either involved or were associated with people tied to politics, partnerships that could have raised problems once Donald Trump becomes president.

The moves by Trump's company follow a cancellation earlier this week of a licensing deal for a hotel in Brazil. The Trump Organization also recently shut down four companies registered in Delaware that had no business operations but appeared tied to Saudi Arabia, possibly vehicles for future projects in the country.

Trump lawyer Alan Garten said Friday that developers in the projects in Azerbaijan, Georgia and Brazil failed to meet terms of licensing deals. He described the moves as "normal housekeeping" and not part of a strategy to reduce potential conflicts of interests.

He said the Trump Organization had no moves underway to cancel any other overseas ventures.

Government ethics experts have been urging Trump to sell his vast holdings and hand the cash to someone with no ties to the president-elect to invest in a way unknown to him, following the practice of most recent presidents. They say ridding himself of his ownership stake in his business, not just managerial control, is the only way to assure he won't put private profit ahead of the public interest in shaping tax, regulatory and foreign policies.

Trump has resisted such a clear break. He has tweeted that he would leave managerial control of his business to his two adult sons and some executives. He said he will hold a news conference next month to discuss details.

Trump has stakes in about 500 companies in more than 20 countries around the globe, though many of the foreign ventures involve him just lending his name to buildings owned by others.

In Azerbaijan, Trump's partner drew the scrutiny of The Associated Press and other news outlets amid questions about corruption and the country's status as a waypoint for money laundering. The partner, Anar Mammadov, is the son of Azerbaijan's transportation minister. The father was described in leaked American diplomatic cables as "notoriously corrupt, even for Azerbaijan."

Though the exterior of the project has been largely constructed, it disappeared from a list of planned Trump Organization projects on the company's website last year amid construction delays and questions about the strength of Anar Mammadov's finances.

Trump earned between $2.5 million and $2.8 million in hotel management fees from the unopened hotel, according to the financial disclosures filed by his campaign. Trump licensing deals generally involve the receipt of a significant minority stake in the property, too.

The Georgia project is for a tower in the Black Sea resort town of Batumi. Trump lawyer Garten said the president-elect's company sent a "default notice" earlier this month to the developer because it had not lived up to terms of the licensing deal.

Garten described the move as typically a first step to canceling a deal.

Just last week, Trump's development partner told Bloomberg News that the long-stalled project would go ahead, and that "talks are on."

In Brazil, the Trump Organization had a deal with a developer putting up a hotel in Barra da Tijuca, an upscale suburb of Rio de Janeiro. The hotel was supposed to be finished in time for the Rio Olympics in August, but only a portion of it is operational even today.

In October, prosecutors in Brazil said they were investigating millions of dollars in questionable investments in the hotel by two small Brazilian pension funds. The probe is part of a larger investigation into corruption in Brazilian pension funds.

The decision was made because the project was behind schedule, Trump spokeswoman Christine Lin said in a statement. The change took effect on Thursday. She did not answer follow-up questions on whether the investigation prompted the decision.

The Rio hotel is owned by LSH Barra. In a statement Friday, that company said the parting was amicable and was unrelated to the corruption probe.

Spearheading the project was Paulo Figueiredo Filho, grandson of Joao Figueiredo, the last of the dictators who ran Brazil between 1964 and 1985.

In a Facebook post earlier this week, Figueiredo said he was no longer involved in the project. He said he lamented Trump was pulling out, but that his admiration for him hadn't "changed one millimeter," and expressed hope of doing deals with him again.

Another Trump project in Brazil, Trump Towers Rio, is also being examined as part of pension investigation. Announced in 2012, construction of the office towers has not begun.

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AP Writers Peter Prengaman and Mauricio Savarese contributed to this report from Rio de Janeiro. Horwitz reported from Washington D.C.