In the week’s roundup of Trump-related conflicts: What the scrapped plans for a new FBI HQ mean for Trump and friends, the biz connections of Trump Jr.’s big meeting, and Bannon’s inadequate financial disclosures.
When the General Services Administration last week abandoned its plan to build a new FBI headquarters in the Washington, D.C. suburbs, President Donald Trump’s business empire caught a break.
The $2 billion project involved converting the FBI’s present HQ into a luxury hotel that would have competed for guests with the Trump International Hotel right across Pennsylvania Avenue.
Even with the FBI deal canceled, conflicts of interest remain. The same Trump business partner who stood to profit from a new FBI headquarters just moved to consolidate a role as top private Washington, D.C. landlord to the U.S. government, government contractors and lobbying groups.
Though the decision may benefit Trump’s pocketbook, there’s no evidence that GSA staff acted improperly in the FBI deal. Instead, the case illustrates the thicket of conflicts of interest federal staff must navigate while making policy, as two of the final three bidders on the FBI project were friends of the president from his career in New York real estate.
Steven Roth, a friend, business partner and political donor to the president, had been in line to win the FBI project via his Vornado Realty Trust. And he recently consolidated his position as the top landlord to the U.S. government, leasing office space in and around Washington, D.C.
Under the now-abandoned GSA plan, the real estate company that won the competition would have been given the rights to build a big hotel on the site of the FBI’s old J. Edgar Hoover building. The hotel project entitlement was to partially compensate the developer for the costs of putting up the new FBI building at a to-be-determined site in Virginia or Maryland.
A real estate executive in D.C. who supported killing the project nonetheless suggested Trump would have been aware of the deal’s possible effect on his finances.
“Clearly this administration has a very personal feel for that block of Pennsylvania Avenue,” Darian LeBlanc told the commercial real estate website Bisnow prior to the GSA’s Tuesday announcement. “I think there are outside unique motivations regarding the disposition of the Hoover Building.”
One contender was real estate tycoon Larry Silverstein, a prospective Trump partner in a plan, later abandoned, to build office towers at the World Trade Center site post-9/11. Silverstein is “a great guy, a good guy … a friend of mine,” the president has said.
Roth co-owns skyscrapers with Trump in New York and San Francisco; every year his company decides how much of the millions of dollars in profits from the buildings it will share with companies owned by the president.
Trump is “a long time friend,” according to an April 2007 letter Roth wrote to Vornado shareholders. “Donald knows that we would be happy to have him continue as a partner indefinitely.”
Once president, Trump appointed Roth to helm an infrastructure council that is supposed to help direct funds toward billions of dollars in public construction projects.
“I think it’s a violent collision of a lot of things, a bureaucratic nightmare. You have a president with conflicts of interest and at war with the FBI,” said Jeff McKay, a Board of Supervisors member in Fairfax County, Virginia, which was one of the proposed locations for the new FBI headquarters.
Even with the FBI deal abandoned, potential conflicts surrounding the Trump administration threaten to get even worse, as Roth chairs a newly minted subsidiary that will be the largest private landlord renting to government agencies, contractors and lobbying organizations in Washington, D.C.
On June 26, his company absorbed the politically connected D.C. landlord JBG Properties into a District of Columbia-specific real estate subsidiary called JBG Smith. It leases 2.9 million square feet of office space to the U.S. government, taking in $116 million in rent per year. It rents another 1.9 million square feet to government contractors earning $81 million in annual rents, and another million square feet to member associations such as industry lobby groups for $46 million per year.
Of those leases, 2.5 million square feet, or $101 million per year worth, were with the General Services Administration, which suffers a reputation as one of the more politicized agencies in Washington.
Former GSA chief of staff David Safavian was appointed in 2002, supposedly to help clean up after a revolving-door scandal involving the agency.
Instead, Safavian was sentenced to a year in prison after he was went on a Scottish golf junket with Jack Abramoff, who was seeking to develop the building that now houses the Trump International Hotel.
More recently The New York Times editorial page lambasted former GSA chief Denise Turner Roth, who allowed Trump to continue leasing the Old Post Office despite contract language banning “elected officials” from receiving income from the GSA lease. After leaving office in January, Roth became a senior adviser to an engineering and construction management firm that handles buildings projects for the U.S. government.
In an interview, Abramoff said he hadn’t kept tabs on the GSA after he was sentenced in 2008 on corruption and tax charges. But “corruption is always going to be a problem” when federal agencies are dealing with private companies, he said.
Steven Roth gave $250,000 on July 7, 2016, to the Trump Victory PAC, a joint fund-raising effort for Trump and the Republican National Committee. On that day he also gave $5,400 to Trump’s campaign committee. On Dec. 6, he donated $5,000 to Trump’s transition committee.
But Roth’s closest financial links to the president come from controlling two buildings that represent some of the most valuable assets in the Trump Organization portfolio.
Trump’s company owns a 30 percent stake in 1290 Sixth Ave. in Manhattan, which a February Wall Street Journal report estimated was worth $429 million, generating about $14.7 million annually for Trump’s company.
Trump also owns 30 percent of the 52-story 555 California St. in San Francisco, a stake worth $322.6 million. It produces about $8 million per year for Trump’s company. Trump’s income does not vary depending on government contracts held by the new subsidiary. But myriad Trump decisions could help or hurt the Roth-controlled company’s profits.
In that vein, the Securities and Exchange Commission financial filings describing the new subsidiary read almost like a shopping list of ways the Trump administration could help, or harm the company. The company is set up largely as a company with expertise in leasing space to the government and its dependencies. But this contains risks, the filings warn investors. Presidents, members of Congress and bureaucrats are in a position to help or hurt the new company’s bottom line.
The financial filings don’t mention it, but perhaps it’s still worth mentioning: Many of these rules, requirements and risks are now under the purview of the company chairman’s business partner.
The possible business connection of Trump Jr.’s Russia meeting
Until last week, Donald Trump Jr. was just another lightning rod for ethical concerns in an administration rife with conflict-of-interest issues.
Critics said that as co-proprietor of his father’s sprawling business empire, Trump Jr. was positioned to enrich himself – and his father – by cutting deals with corporations and regimes that sought to curry favor with the leader of the free world.
But after The New York Times’ exposé on Trump Jr.’s sit-down with a Russian lawyer closely tied to the Kremlin, the presidential son also became a lesson in a type of conflict of interest everyone understands: nepotism.
The scandal showed how much trouble one could get into by confusing family loyalty with effective management.
“Donald Trump has a long history of putting family members in leadership and executive management positions regardless of experience, knowledge, or competence,” the former chief operating officer of Trump Plaza Hotel and Casino wrote in a Friday essay describing the Donald Jr. episode as a typical Trump nepotism foul-up. Today the stakes are greater than mere Atlantic City casinos.
A U.S. senator even demanded that Trump Jr. be investigated for treason.
At its heart, the scandal involves Trump Jr.’s quest for negative information about Hillary Clinton – and his willingness to enthusiastically accept over email the Russian government’s offer of political support for his father’s presidential campaign.
There was another conflict-of-interest crosscurrent to the transaction as well. As he told Fox News commentator Sean Hannity, Trump Jr. convened the meeting because it was set up by Russian pop singer Emin Agalarov, son of Moscow megadeveloper and Putin confidant Aras Agalarov.
The Trumps and the Agalarovs had done business before: Agalarov sponsored Trump’s Miss Universe Pageant in Moscow in 2013.
After the pageant, as Slate has reported, Agalarov signed a preliminary deal with Trump to build a multimillion-dollar high rise in Moscow. “TRUMP TOWER-MOSCOW is next,” Trump tweeted, but the project remains unbuilt.
In an interview with Yahoo News, Rob Goldstone, the publicist who set up the meeting between Trump Jr. and the Russians, said the Moscow Trump Tower was abandoned after the Russian economy soured, in part because of U.S. sanctions imposed because of Russia’s conflict with the Ukraine.
As Yahoo News reported, “Goldstone’s version of events implies a possible explanation for Trump’s interest in lifting sanctions on Russia – a policy move his administration quietly pursued in its first few weeks until it ran into strong opposition from members of Congress and officials within the State Department.”
Trump Jr. told Hannity he didn’t understand all the fuss:
Obviously, I want to hear the information. That’s what we do in business. If there’s information out there we want it, and then we make what we do with it. If there was something that came from it that was shady, if it was a danger to national security, I would obviously bring it right to someone. But I didn’t know what anything was. Turns out, it was nothing! And therefore there is nothing to be able to actually talk about.
From the crowd: Bannon didn’t properly disclose debt
The #CitizenSleuth project produced its first scoop last week: a report about a serious error on a top presidential adviser’s ethics filing.
The crowdsourcing effort by The Center for Public Integrity and Reveal from The Center for Investigative Reporting turned up a story showing that Steve Bannon, White House chief strategist and former executive of Breitbart News, failed to properly disclose more than $2 million in mortgage debt on his White House ethics report. Despite the improper disclosure, top White House ethics officers incorrectly certified that Bannon’s disclosure form was complete and complied with federal rules, records show.
“The real story is how shoddy the ethics process is in the White House,” said Kathleen Clark, a professor of law at Washington University in St. Louis and an expert on government ethics.
This month we posted a searchable database of ethics reports filed by top Trump administration officials and invited readers to help investigate potential conflicts of interest by reviewing the data and emailing tips and leads.
The Bannon story resulted from a #CitizenSleuth tip. Here’s how you can get involved.