US Banks know Trump is a con man, so he has to get capital via illegitimate channels.
Those sources require services in return.
A unique service Trump can offer his Russian backers is the promise of lifting sanctions.
These facts have real consequences for the future of our constitutional democracy. That growing realization has a lot of sober people on edge for good reason.
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Trevor Noah may have been joking, but #DonTheCon really does look more and more like an African despot the longer he stays in power. His entire business operation creates a conflict of interest that requires him to plunder the resources of the country he is supposedly governing. If he doesn’t, his business empire collapses. That is the main theme here. It has been in play for decades and hasn’t changed. Here’s the bare bones version:
Donald Trump needs cash to finance his deals.
Banks — especially US banks — are tired of his pump and dump game.
In order for him to get money he has to go to unsavory characters.
The people he deals with have problems of their own.
They need to launder illegal cash.
Don the Con can help them do that.
Here’s how it works:
* Trump sells real estate at inflated prices
* The gangsters pay for it in cash
* After awhile, they unload the properties
* The money obtained from the sale is now clean
It ain’t rocket science.
All you need is a crooked bank to grease the wheels of the transaction.
The Bank of Cyprus, to take one example, had a long history of laundering money for Russian oligarchs.
Now that you have the basic contours of the deal, let me add a few players. They come in sets. You can explode each set to get ever finer detail, but it is not necessary for most of them at this point. A couple of players, however, do deserve special attention.
There have been numerous efforts at diagramming out all the connections between Trump and Putin. These get very tangled very quickly because so many players are involved and they are using so many different shell corporations and real estate deals. However, no one ever accused Trump of being complicated. The guy barely plays checkers, let alone eleven-dimensional chess. Putin is a bit more complex. But Putin’s operations still serve a relatively limited set of purposes. Adding Tillerson to the mix brings everything into crystal clear focus. Tillerson’s a company man. His company happens to be ExxonMobil. Focusing on these three makes it pretty clear how the universe of intersecting sets works when it comes to Trump/Putin alliances.
While Trump, Putin, and Tillerson are power players, they do not operate in vacuums. Their background influences provide constraints and context for the main actors. At this point, however, they are not needed to follow the story.
The Venn Diagram shown above is intended to provide a relatively simple framework for following what is going to develop into a complex and complicated story. This diagram has not changed since I first put it together during Tillerson’s confirmation hearings. Recent revelations have only served to confirm the model.
Set “A” are the Trump family members (Don Jr., Ivanka, and Jared).
Set “B” are Trump associates who have dealings with Russia (e.g., Wilbur Ross, Paul Manafort, Boris Epshtyn, Felix Sater, Michael Flynn, Erik Prince, Carter Page, etc.). This is a set that will undoubtedly grow as more people/transactions come to light. This is the part of the story where it is easy to get lost in the weeds.
So much shady stuff is going on here, you can be sure that a lot of side deals are getting cut along the way. For example, consider the Trump Soho operation. Felix Sater and Tevfik Arif of Bayrock Group ran the operation. Trump got about 17% of the net for letting them use his brand. But he didn’t handle the actual transactions. This keeps his hands clean. But it’s pretty clear this is just another version of the standard operation. How standard? Google this “Russian billionaire Trump tower.” For a real laugh, Google this “fugitive billionaire trump tower.” When you realize who is the largest commercial tenant in Trump Towers, it’s clear this game is not just for Russians. But we’ll focus on Russia for now.
Set “1” are individuals who have personal relationships with people in Set “A” This includes Wendi Deng, Dasha Zhukova, Roman Abramovich, Demitry Rybolovlev, and Sergey Kislyak.
Set “2” are individuals who are associated with people in set “B” via known business relationships. This includes Demitry Rybolovlev, Tamir Sapir, Alexander Mashkevich, Boris J. Birshtein, and Igor Sechin.
All the people in sets 1 and 2 have some level of connection to Putin. Almost all of these relations are commercial. However, some go back to his days in St. Petersburg at the KGB. Both sets would undoubtedly grow significantly if anyone ever got to see Trump’s tax returns.
Bottom line: Trump, and his family, has a long and deep history of doing business directly and indirectly with corrupt Russian businessmen.
Trump is not the only money launderer around. There are plenty of places to launder money. To keep the money flowing in his direction, Trump has to provide a service that makes him special. This is where Tillerson comes in. Tillerson is not a criminal. He’s a company man. The company, of course, is ExxonMobil. But that isn’t the only company he was heading. This brings us to Set “3”.
Set “3” are the people on the board of Exxon Neftegas, the Bahama-based Exxon-Rosneft joint venture. The name of most interest here is Igor Sechin, the head of Rosneft (The world’s largest publicly traded petroleum company, majority owned by the Government of Russia). He is currently banned from traveling to the United States. If you were paying attention, you noticed his name appeared in Set “2” as well. He’s important.
The intersection of Tillerson/ExxonMobile/Rosneft, represented by “$$$” is a key driver of this unholy trinity. The largest operation of Exxon Neftegas is the Sakhalin-1 project.
The Sakhalin-1 project is part of a $500 Billion deal that got put on ice (pun intended) when Obama levied sanctions against Russia for invading Crimea. The recent effort to get sanctions lifted ran into a speed bump when Treasury “in consultation with the president” decided not to grant the waiver.
Two points of interest here.
1) There is a clock ticking on some of the agreements Exxon and Russia have entered in to. If Exxon can’t meet its contractual obligations by the end of 2017, they lose exclusive exploration rights in the Black Sea. But this is really a test case, not the crown jewel. The crown jewel is Sakhalin-1. There is no clock ticking on that project. It is just on ice.
2) If the Steele dossier is correct — and so far everything in it has checked out — there is this bombshell:
[A]ccording to the dossier's author, former British spy Christopher Steele.
"Sechin's associate said that the Rosneft president [Igor Sechin] was so keen to lift personal and corporate western sanctions imposed on the company, that he offered [Carter] Page and his associates the brokerage of up to a 19 per cent (privatised) stake in Rosneft," the dossier said. "In return, Page had expressed interest and confirmed that were Trump elected US president, then sanctions on Russia would be lifted."
That deal has gone through. What caught people’s eye (h/t Rashaverak) is the discrepency of .5% between the Steele dossier and the actual sale volume. This led to speculation that portion (worth about $300 million) was the brokerage fee. If Rashaverak is right, this puts Trump and Co. in a real bind. Putin is not the kind of guy to pay for something that is not delivered. This means the pressure is still on to close the deal, lift sanctions, and deliver the goods.
$11 Billion in Rosneft stock sounds like a lot, because it is. But it pales in comparison to the $500 Billion payout that Sakhalin-1 can provide Russia and ExxonMobil. I think Tillerson will have no choice but to continue as Secretary of State until sanctions are dropped and the deal is finalized. Then I expect him to depart.
The big unknown here is what is going on with the criminal investigation of Trump’s associates. The investigation clearly has legs. We know there was a FISA warrant to follow Page. We know that Flynn, Manafort and Kushner all failed to report important dealings. Those are federal crimes. Given the recent revelations that there are actual tape recordings of Trump and his associates (including his kids Don Jr. and Eric) talking about this, expect a lot more fish to get caught up in the nets. To follow this part of the story, one of the best sources is Louise Mensch, who posts about this on Twitter.
The question now is one of kinetics. Does the investigation outpace the lifting of sanctions, or can they slide that in under the wire before the nets get hauled in? Recent revelations surrounding Chaffetz, suggest Ryan and McConnell are potentially in trouble, too. (h/t Mopshell) This broadens the impact of Trump’s behavior to a level that surpasses anything we saw with Watergate or Iran-Contra.
Given the obviously impeachable nature of these offenses, a related question is whether or not Pence gets scooped up in this. That fact that Pence made a point of praising Putin during the campaign takes on new relevance in the current context. The fact that Manafort (from Set “B”) was so instrumental in Trump picking Pence over Christie is a good reason to go over his role in any of this with a fine tooth comb.
We have spent so much time responding to “unprecedented" (read: “outlandish”) events that we should accept the fact we are sailing deep into uncharted territory. I’ve lost count of how many “unimaginable” things are now routine. Now is a good time to look at things with a broad view lest we become victims of our own failure of imagination.
Even briefly considering the astounding level of disruption that would follow impeachments of so many people in the presidential line of succession, winning the House in 2018 takes on a critical importance beyond anything we have ever seen in our history. The next Speaker may wind up being president.