We asked financial experts to explain Trump’s bizarre business methods in Scotland. They were mystified. – Mother Jones

Donald Trump on the third green by the sea at Trump International Golf Links near Aberdeen.Andrew Milligan / PA Wire URN: 18214410

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The New York Times series based on Donald Trump’s tax returns has revealed a lot about the president’s finances, but so far he has yet to unravel one of the biggest mysteries of Trump’s business empire: his land Scottish golf course.

The clubs – one in Turnberry, located outside of Glasgow, and one in Aberdeenshire, located on a remote part of the coast along the North Sea – have been one of the main objectives of the Organization Trump over the past decade. Trump has invested more money in these properties than in any other part of his business. Yet no club has already made a profit. In fact, together they have lost as much as $ 6.2 million per year over the past 14 years. Trump has other failed investments, but he rarely sticks with a losing company for so long.

It’s not the only strange thing. Instead of investing money in the business, in return for equity, as an investment usually works, Trump lent himself the money to develop the properties and keep them afloat. And he dramatically overestimated the courses – and not just in his typical boastful manner, but in the detailed company records carried out each year in the UK.

True, Trump is known to employ aggressive tax avoidance strategies. In October 2018, the New York Times reported that he and his siblings had engaged in tax evasion in connection with their father’s estate. But tax and financial experts Mother Jones consulted about his Scottish businesses were intrigued by his business methods, which they said had no obvious tax or financial advantages. Maybe, they said, Trump is just plain bad at business.

However, some critics have speculated on a more nefarious explanation for Trump’s abnormal trading relationship with Scottish golf courses: money laundering. To that end, members of the Scottish Parliament have lobbied to investigate Trump’s golf clubs using a statute typically aimed at kleptocrats.

From the start, Trump’s Scottish businesses strayed from his usual OM. It has traditionally financed its development projects with borrowed money. But from 2006, when he started to develop his property in Aberdeenshire, he deviated from that practice. He financed his Scottish lessons out of his own pocket, pouring, by his own estimate, more than $ 200 million into clubs. These expenses came during a nine-year cash-spending frenzy during which Trump gave up some $ 400 million on various properties in the United States, Scotland and Ireland.

Plus, the way he pumped money into Scottish courts is downright bizarre. Every penny he invested in the properties was loaned to the Scottish companies he owns that control the golf courses, by Trump himself or one of his New York-based LLCs.

Tax experts say it’s not unusual for different parts of a business based in different countries to lend to each other. This can create tax advantages since the borrower may be able to write off the interest payments. Yet Trump’s loans (from himself and his LLCs to his Scottish companies) bear no interest and have no maturity date, thus negating the most common tax benefit.

“I don’t see the tax angle in doing this,” says Daniel Shaviro, professor of tax law at New York University Law School. “There might be an angle of stupidity that would match what we know about him as a businessman more generally.”

Shaviro and several other tax experts have speculated that Trump may be trying to take advantage of a variety of other, more obscure tax avoidance tactics, but stressed that these strategies are, for the most part, unsuccessful. not legally recommended, or even outright illegal. .

The Trump Organization did not respond to requests for comment.

Connoisseurs Mother Jones we spoke to were also intrigued by the values ​​Trump placed on his Scottish properties. For example, according to Trump’s most recent corporate documents, he values ​​his Aberdeenshire price at $ 40.5 million. That’s almost four times what comparable Scottish clubs are worth. Carnoustie Golf Links, a historic and premier course that hosted the British Open in 2018, is valued at $ 10.4 million. Kings Barns Golf Links, which like Trump’s Aberdeenshire property runs along the North Sea and is owned by an American businessman, is valued at $ 10.3 million.

Trump has a habit of overvaluing or undervaluing his assets depending on his current goal – inflating his equity for financing or deflating property values ​​when he seeks lower tax assessments – his former lawyer and fixer Michael Cohen Recount Congress in 2019. Allegations that Trump misrepresented his value when seeking loans are currently at the center of an investigation into Trump and his company by New York Attorney General Letitia James. Documents Cohen provided to Congress show Trump excluded his Scottish resorts from the forms he submitted to banks to apply for loans. This in itself could be of interest to investigators. In court records, James raised questions about a similar action by Trump: he omitted financial data about his Chicago plans from the financial statements he gave to banks. And she wanted to know why.

The strangeness of the numbers – and the method by which Trump invested – has raised eyebrows in Scotland. Earlier this year, Members of the Scottish Parliament started urging their government to open Trump’s books and use what’s called an Unexplained Wealth Order (UWO). As the name suggests, this is a UK law that can be used to compel a politically eminent person to explain how they achieved a financial transaction that is not what is publicly known about their finances. In 2018, this law was used to examine how the wife of a jailed former Azerbaijani government official managed to afford £ 16million at Harrods.

Patrick Harvie, Member of the Scottish Parliament and co-leader of the Scottish Green Party, is leading the effort to use a UWO to investigate Asset. “He is not someone who inspires confidence in healthy finances and healthy business,” he said. Mother Jones this summer. “The fact that there are many allegations circulating that US authorities have investigated, whether in relation to Russia or its political relations at the national level, you don’t need to sniff the air for very long. to see that there is something smelling. “

Adam Davidson, who covers business for the New Yorker and who investigated Trump’s finances, detailed Trump’s bizarre financial maneuvers in Scotland and why he thinks they may be evidence of shady activity.

The fact that Trump has a track record of partnering with people suspected of money laundering fuels the suspicions of his critics. One example is the Agalarovs, the Azeri-Russian family with whom Trump teamed up to produce the Miss World pageant in Moscow and with whom he explored the development of a tower in Moscow. The Senate Intelligence Committee reported this summer that the Agalarovs “have close ties to Russian organized crime and have been closely linked to individuals involved in murders, prostitution, arms trafficking, kidnappings, extortion, drug trafficking, money laundering and other major criminal enterprises ”. The committee also noted that Trump’s partners in the Trump Soho hotel project had money laundering links.

Real estate is a common vehicle for money laundering: anyone can buy real estate, sellers accept cash, and it is relatively easy to hide the true owner of a property.

In Scotland, Trump has offered lavish real estate developments at his two clubs. Although his development project has so far been blocked in Turnberry, Trump has received approval to move forward with his plans in Aberdeenshire. Martyn McLaughlin, a Glasgow journalist Scottish A newspaper that has stubbornly covered Trump’s Scottish adventures, says he and many locals wonder who would put six or seven figures to buy a house on this part of the Scottish coast, known for its booming offshore oil industry.

“How they will have a viable business plan from this I’m not sure,” he said. Mother Jones this summer. “Who pays hundreds of thousands of pounds for a family villa in North East Scotland that bears the corrosive mark of Trump?

McLaughlin said that on an initial open house for potential buyers – before the COVID-19 pandemic restricted travel – interested parties appeared mostly foreign. “Which begs the question: who invests? Who gives money to the president’s company? This is the most explicit opportunity to put money into the Trump organization in exchange for property.

The Trump Organization’s proposed development in Aberdeenshire is expected to cost an additional $ 200 million, and it’s unclear exactly where Trump will find the money for it. The pandemic has slammed its hotel empire, especially its Scottish courts, which have largely been destinations for American travelers. Trump’s company also faces loans totaling over $ 400 million that it will have to either repay or refinance over the next few years.

Whether Trump can pull off this next stage of development for his Scottish seaside resorts or prices sink further into unprofitability, Trump’s financial future (whether he stays in office or not) seems increasingly tied. to these properties. Therefore, it remains to be noted that so much about his Scottish relationship remains unexplained and confusing.


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