Page 92 - Forbes - USA (February 2018)

TRUMP’S TENANTS

to the acquisition of wealth.” Scholars have person visits and took rough measurements.
been debating what exactly constitutes an (There were obstacles: The day after we sent
“emolument” since the moment Trump won questions to the Trump Organization, two
the election, and nearly 200 congressional security guards kicked a Forbes reporter out
Democrats sued the president over possi- of a shopping area of one Trump property.)
ble violations in June. Much of the yammer- When we could not get more detailed in-
ing in this area surrounds Trump’s hotels, es- formation, we assumed tenants paid rates
pecially the one in Washington, D.C., which comparable to those for similar properties
has billed $268,000 in hotel rooms and cater- in their respective markets. We believe we’ve
ing to the Saudi government, and his inter- tracked the sources for 75% of the rent flow-
national licensing deals, which allow foreign ing into the president’s coffers.
tycoons and hucksters, many with connec- The numbers are significant: $21 mil-
he
l
a
T tions to their local governments, to pay the lion here, $12 million there. The names even
st
rge
American office of China’s largest bank sits Trump Organization more than $5 million more so: At least 36 of Trump’s tenants have
on the 20th floor of Trump Tower, six lev- a year in order to profit from the president’s meaningful relationships with the federal
els below the desk where Donald Trump name in far-flung locales. government, from contractors to lobbying
built an empire and wrested a presiden- But that’s all small potatoes. The real firms to regulatory targets.
cy. It’s hard to get a glimpse inside. There money in the Trump empire comes from How tangled is it all? Forbes discovered
do not appear to be any public photos of commercial tenants like the Chinese bank. one deal, previously unreported, in which
the office, the bank doesn’t welcome visi- Forbes estimates these tenants pay a collec- Trump partially serves as his own landlord:
tors, and a man guards the elevators down- tive $175 million a year or so to the presi- The U.S. government is paying some rent to
stairs—one of the perks of forking over an dent. And they do so anonymously. Federal the person who runs it.
estimated $2 million a year for the space. laws, drafted without envisioning a real es-
Trump Tower officially lists the tenant tate billionaire as president, require Trump oiled down, the Trump Organiza-
as the Industrial & Commercial Bank of to publicly disclose the shell companies he tion is more a collection of deals
China, but make no mistake who’s paying owns—but not the hundreds of business- Bthan an operating business. While
the rent: the Chinese government, which es pouring money into them or even the ex- Wal-Mart and General Motors rely on mil-
owns a majority of the company. And while tent of the money involved. lions of customers around the world, the
the landlord is technically the Trump Or- “The public reading the [disclosure] Trump Organization relies on a handful of
ganization, make no mistake who’s cashing form doesn’t know who is paying the pres- large entities. That insulates the president’s
those millions: the president of the United ident,” says Walter Shaub, who resigned as business from consumer whims—and lag-
States, who has placed day-to-day manage- the federal government’s top ethics official ging favorability ratings—while leaving him
ment with his sons but retains 100% own- in July. The president likes it that way. Nei- vulnerable to corporate (or government)
ership. This lease expires in October 2019, ther the White House nor the Trump Or- interests.
according to a debt prospectus obtained by ganization would provide a list of the pres- How, then, to consider the backroom
Forbes. So if you assume that the Trumps ident’s tenants, much less reveal what they discussions between federal officials and
want to keep this lucrative tenant, then Eric pay. Instead, Trump Organization lawyer Walgreens Boots Alliance, one of the largest
Trump and Donald Trump Jr. could well Alan Garten provided a statement: “Follow- pharmacies in the world? Through its brand
be negotiating right now over how many ing the election, the Trump Organization Duane Reade, it is the highest-paying tenant
millions the Chinese government will pay implemented a rigorous vetting process for in Trump’s skyscraper at 40 Wall Street in
the sitting president. Unless he has already all transactions, including leases, which in- New York, with $3.2 million in annual rent,
taken care of it: In September 2015 then- cludes a detailed review and approval by our according to a 2015 prospectus. In October
candidate Trump boasted to Forbes that he chief compliance officer and outside ethics 2015, Walgreens Boots Alliance announced
had “just renewed” the lease, around the advisor.” In other words, government eth- a $9.4 billion merger with rival Rite Aid, re-
time he was gearing up his campaign. ics officials, charged with detecting conflicts quiring a sign-off from antimonopoly regu-
It’s a conflict of interest unprecedented in of interest, have never seen the president’s lators. After the deal failed to secure approv-
American history. But hardly unantici pated. rent roll. al under President Obama, it then fell to the
The Founding Fathers specifically built this So we created one on our own, identi- Trump administration, which arrived in
contingency into the Constitution through fying 164 tenants, in virtually every indus- Washington during the first quarter of 2017.
the Emoluments Clause, which prohib- try, from all around the world, and then es- According to federal disclosures, that was
its U.S. officials from accepting gifts, titles or timated payments, wherever possible, based the same quarter Walgreens Boots Alliance
“emoluments” from foreign governments. In on property records, debt prospectuses and began directly lobbying the White House
Federalist 75, Alexander Hamilton framed conversations with real estate experts. (See on “competition policy issues.” In Septem-
the threat thus: “An avaricious man might chart, p. 91.) When tenants refused to say ber, despite objections by one of the two
be tempted to betray the interests of the state how much space they rented, we made in- commissioners at the Federal Trade Com-

90 | FORBES FEBRUARY 28, 2018