R E I G N A F F A I R

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White
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December 2018

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A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 1

Date
2
CONTENTS
PRESIDENT TRUMP: THE BUSINESSMAN 4

THE EXECUTIVE STEPS INTO HIS NEW ROLE 5

GEORGIA: BEHIND THE TOWER 6
INDIA: SELLING ACCESS TO THE TRUMP FAMILY 7

THE TRUMP ORGANIZATION RETURNS

TO THE DOMINICAN REPUBLIC 8
HOW TRUMP’S FIRST DOMINICAN PROJECT FAILED 10
RESTARTING A TURBULENT BUSINESS RELATIONSHIP
WITH A NEW DEAL 11
DEBUNKING THE TRUMP ORGANIZATION’S CLAIM
THAT IT IS NOT A NEW DEAL 11
DOMINICAN REPUBLIC RECORDS CAST FURTHER DOUBT
ON TRUMP’S CLAIM 13

HOW TRUMP IS CONFLICTED 14

THE POWERS HIGH UP 14
WHERE DOES THE TRUMP ORGANIZATION END AND THE
TRUMP ADMINISTRATION BEGIN? 16

RECOMMENDATIONS 17

3
PRESIDENT TRUMP:
THE BUSINESSMAN
“[The Trump brand] is certainly a
hotter brand than it was before.
But in theory I could run my business
perfectly, and then run the country
perfectly. And there’s never been
a case like this...” President-elect
Donald Trump, November 2016

Despite President Donald Trump’s pledge to pursue

no new foreign business deals while in office, Global
Witness’ investigation shows that Trump is forging
ahead with what appears to be a new real estate deal Global Witness' undercover investigation shows that the Trump Organization is engaged
in the Dominican Republic–regardless of any corruption in what is apparently a new business deal at the Cap Cana resort in the Dominican Republic
or conflicts of interest risks. – despite corruption or conflicts of interest risks. © Global Witness

This follows their failed 2007 real estate deal in the While it is not illegal for Trump to run a private business
Dominican Republic, which saw investors lose millions while in office, Cabinet members and senior administration
of dollars as construction never got off the ground in officials are required by law to fully divest from any private
the midst of the financial crisis. financial interests that may intersect with their professional
duties. The vice president and president of the U.S. are
Trump’s company later sued the Hazourys and their exempt from these rules.
company for not paying them the agreed fees in their
2007 licensing deal. They also alleged that the Hazourys Trump has placed his business interests under the
committed “text book fraud on such a wide scale.” Trump’s control of his children through a trust, but can revoke
company later received cash and two pieces of property that at any time.
as in kind payments worth millions under their 2013
Settlement Agreement. The settlement with the Hazourys The Trump Organization’s business in the Dominican
was on the basis of no admission of liability. Republic has also spurred questions about the relationship
between the U.S. president and Dominican officials.
Now, nearly a decade later, the Trumps have returned to In particular, questions have arisen over whether
the Cap Cana resort and may be back in business with the Dominican officials changed rules so that buildings
Hazourys. Until now, further details of the Trumps’ new could be constructed higher to benefit a Trump company
business in the Dominican Republic has been unknown. project, which could be a potential violation of the U.S.
Global Witness went undercover at the Cap Cana resort Constitution’s Emoluments Clause.
and discovered that the Trumps are pursuing what appears
to be a new deal, in contradiction to Trump’s pledge not to. Global Witness’ new investigation underscores the need for
Hallmarks of a new deal include, among others, a potential a comprehensive conflict of interest law that holds both the
change in Trump’s role as developer instead of licensor, and president and vice president accountable to the American
the fact that the new and previous developments are not people. As his own lawyer stated ahead of his inauguration:
even close to one another – they are five miles apart. “[A]ny new deal could — and I emphasize could — be
perceived as causing a conflict or as exploiting the office
All of the subjects in this report were approached by Global of the presidency.”
Witness for their comment. Responses received at point of
publication have been included in this report. In response to our investigation, the Trump Organization
denied that they are involved in any current project in the
Dominican Republic.

4
THE EXECUTIVE STEPS Global Witness’ investigation shows not only that Trump
is contradicting his pledge to Americans but also that he
INTO HIS NEW ROLE may have violated the Emoluments Clause of the U.S.
Constitution, which prohibits the president from accepting
A month before his inauguration, President-elect Donald J. emoluments from a foreign official, including a salary, fee or
Trump took to Twitter to announce that he would be leaving profit from one’s employment or office.
his business to his sons–Don Jr. and Eric–and executives
so that he could focus on being President. He asserted that What Trump’s Dominican misadventures perhaps best
“[n]o new deals will be done during my term(s) in office.” demonstrate however, is the need to reform U.S. conflict of
interest law.
A month later at a news conference, Trump pledged that
no new foreign deals would be made by his company –the Past U.S. presidents have kept themselves from becoming
Trump Organization—during his presidency to avoid actual embroiled in real or perceived conflicts of interest by
or perceived conflicts of interest. As his lawyer Sheri Dillon following customs; for example, by disclosing their tax
stated, “any new deal could — and I emphasize could — be returns. Every major-party presidential nominee for the
perceived as causing a conflict or as exploiting the office of past 40 years has released at least some of their tax returns.
the presidency.”

Yet within weeks of being sworn in as president, the

spotlight was back on the Trump Organization as Eric was
featured posing with former business partners who the
organization once sued, alleging in court documents that
they had engaged in “textbook fraud on such a wide scale.”
The lawsuit was later settled without any admission of
liability from the Hazourys. There Eric stood squinting in
the bright coastal sun between two top businessmen in the
Dominican Republic’s luxury real estate industry: Ricardo
and Fernando Hazoury.

Eric’s visit prompted speculation about the Trump

Organization’s interest in developing properties in Cap
Cana, a luxury resort in the picturesque eastern part of
the Dominican Republic, despite its previous deal there
falling through. It also generated questions about what
this potential deal meant for President Trump’s pledge to
pursue no new foreign business while in office.

Global Witness’ new undercover investigation in the

Dominican Republic confirms that the Trump Organization
is planning a real estate project in the country. Features
of the deal also suggest that contrary to Trump’s pledge
to avoid new foreign deals that may present conflicts of
interest, the Dominican deal is new.

Under the deal, Trump stands to profit handsomely

since he and the Trump Organization should be viewed
as synonymous. While his sons currently control the
company’s day-to-day operations through a trust he
created, Trump never fully divested and can still receive A Cap Cana magazine article celebrates Eric Trump’s visit to the resort in February
income from the company. He can revoke their authority 2017 and the rekindled relationship between the Trump Organization and Cap
Cana, S.A. owners and brothers, Ricardo and Fernando Hazoury. © Global Witness
and retake the assets in the trust at any time.

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 5
 GEORGIA: BEHIND THE TOWER
In Batumi–a resort town in the country of Georgia
dubbed the “Pearl of the Black Sea”–there is a planned
luxury high rise that its local developer previously
called a “fake” Trump tower. Trump signed a deal
with the developer Silk Road Group (SRG) in 2011 and
Trump’s former Secretary of State and ex-CEO of Exxon Mobil, Rex immediately made nearly $1 million by licensing his
Tillerson, left the energy company, sold off his millions of shares
and put the cash into a trust to be overseen by a third party in name to this project. Yet despite Trump’s enthusiasm
order to avoid conflicts of interest while in government. © Jason for the planned $250 million project, he backed out
Janik/Bloomberg via Getty Images
weeks before his presidential inauguration, putting
an end to his involvement.

The tower developer decided to go ahead with the

original Trump building plans anyway, including the
décor proposed by Ivanka Trump and adopting the
name “T Tower.”

So why back out of the Batumi deal? According to

The New Yorker, several experts expressed concerns
that the deal involved “red flags for bank fraud and
money laundering.” Global Witness’ November 2017
Trump’s nominee for Army Secretary, billionaire Wall Street investigative report, “Narco-a-Lago: Money Laundering
trader Vincent Viola, withdrew his name from consideration after
announcing that it would be too difficult to distance himself from at the Trump Ocean Club, Panama” also discussed
his business. © Eliot J. Schechter/NHLI via Getty Images questionable Trump real estate licensing deals
involving warning signs for money laundering. The New
And most top officials in the executive branch— Yorker also linked the Trump Organization to a “Kazakh
including senior administration officials and oligarch who has direct links to Russia’s President,
Cabinet members—are subject to ethics rules Vladimir Putin.”
that require them to separate certain political and
private business interests. Publicly stated reasons for cancelling the project run
the gamut. The head of SRG told Reuters that Trump
But Trump has not followed the customs of dropped the deal to sidestep a conflict of interest. A
past presidents and the ethics rules that other lawyer for the Trump Organization has given different
administration officials are required to adhere to reasons at different times: That it was part of “normal
do not apply to the president and vice president. housekeeping” and not because of potential conflicts
There are no laws prohibiting the president from of interest, that the project failed to meet the terms
engaging in private business matters. There are of the licensing deal and because of possible future
also no laws to keep the president from promoting violations of the Emoluments Clause to the U.S.
his business while in office. And, there are no Constitution once Trump became President.
laws to prevent the president from financially
benefiting from official acts, short of outright Yet, in an odd turn of events, just after Trump won
bribery or receiving gifts. This raises serious the 2016 presidential election, SRG reportedly told
ethics concerns among some lawmakers and the press that the project was back on track, only to
many Americans. be contradicted months later and weeks before the
presidential inauguration by a joint statement with
This report shows why U.S. ethics law should the Trump Organization announcing the project
be changed. Because if Donald Trump–head of had ended.
foreign policy for one of the world’s most powerful
countries–is now doing new deals in a small For now, the tower will not officially bear Trump’s
Caribbean country, how can the American people name but his former business partners in Georgia
have faith that he is acting in their best interest hope that the old licensing agreement will one day
and not his own? be revived. There is nothing stopping Trump from
formally stepping back into this business relationship,
especially with deeper political and business
relationships so important to the real estate industry.

6
Donald Trump, before his White House run, shakes hands with former
business partner George Ramishvili. Regarding a real estate deal in the
country of Georgia, Ramishvili told a Forbes reporter, “[t]he tower will be
ready for the Trump mark” … “if the Trump mark is ready to come back to
the tower.” © Todd Heisler/The New York Times/Redux

INDIA: SELLING ACCESS

TO THE TRUMP FAMILY
While Trump ended the deal in Georgia, other more
lucrative deals are still in the pipeline. One must look
no farther than India–the Trump Organization’s biggest
market outside of the U.S. With five Trump-branded
developments valued at an estimated $1.5 billion–
yielding licensing fees up to $11 million between A full, front page advertisement placed by a local developer in several
2014 and 2017–it is no surprise Don Jr. and Ivanka Indian newspapers in anticipation of Don Jr.’s visit to promote the
Trump Towers development near Delhi asked: “Trump is here, Are you
prioritized high-publicity visits to the country. invited?” and “Trump has arrived. Have you?”. © @PATRICKFRENCH

But, behind the luxury there are warning signs seen

across many of Trump’s branding deals. A recent Don Jr.’s visit came just three months after his sister,
investigation published by The New Republic shows the Ivanka, also visited India to speak at a high profile
Trump Organization’s business partners in India were business summit. This visit raised questions in the
under government investigation for illicit activities. U.S. about overlaps between her representation of the
According to the investigative journalist, these business Trump brand and her role as a senior White House official.
ties leave the Trump Organization vulnerable to potential
violations of the U.S. Foreign Corrupt Practices Act. A retired planning official in the Indian city where
two major Trump developments are planned told the
Despite the corruption risks, the deals live on. In February investigator for The New Republic that right after Ivanka’s
2018, Don Jr. visited India and in anticipation, a local trip (and before Don Jr.’s February visit) final permits
developer ran ads in Indian newspapers offering anyone for the project were rushed through.
making a deposit on a Trump-branded apartment the
opportunity to join him for a conversation over dinner. As this example shows, the Trump brand thrives
The Washington Post reported that, according to a local in part because of the access afforded to and by the
developer, over $100 million worth of real estate had President’s children. Not only is there a significant
been sold in the towers–$15 million of which within financial incentive for Don Jr. to sell access to his family
days after the offer appeared in newspapers. as a proxy of the White House in exchange for real estate
deals, but Ivanka’s official visit and increased brand
“I’m here as a businessman… recognition likely contributed to the Trump Organization’s
I’m not representing anyone.” successful real estate sales in India.

Donald Jr. Trump, Global Business Summit

in New Delhi, India, February 2018

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 7
At a January 2017 press conference, Trump and his lawyer lay out his plan to avoid conflicts of interest, including his pledge to do no new foreign deals
while in office, as his children, Don Jr., Ivanka and Eric look on with Vice President Mike Pence (left to right). © TIMOTHY A. CLARY/AFP/Getty Images

THE TRUMP ORGANIZATION

A A. Global Witness’
undercover investigator

RETURNS TO THE
meeting with a sales
representative and exclusive

DOMINICAN REPUBLIC
broker at the Cap Cana resort
at the office of 7Mares luxury
tower construction site.
© Global Witness

In January 2017, standing before a conference table covered B. A view towards Trump’s
with manila folders and documents, President-elect Trump B Juanillo Beach project
(center-right), Sanctuary
announced that he would not take on any new foreign deals Cap Cana (right) and the
while in office. This was just one of many pledges he made to Hyatt twin towers under
construction (left)
separate himself from his business and to address conflicts from the top of the
of interest. 7Mares building site.
© Global Witness

In the end, Trump appears not to have stuck to this pledge, C. Cap Cana sales
as we discovered in our latest investigation. In October C representative points toward
Eden Roc at Cap Cana and
2018, an undercover investigator for Global Witness met Farallón Estates also at the
with a sales representative at the vast Cap Cana resort resort (far right corner).
© Global Witness
currently under development in the Dominican Republic.1
Our investigator was posing as a representative for a wealthy D. Cap Cana sales
business man looking to buy properties. representative showing
Global Witness’ undercover
investigator through
During this meeting which we captured on video, the sales D Eden Roc. © Global Witness
representative started to pitch condominiums in a section
of the Cap Cana resort called “Juanillo Beach.” According to
the sales representative, the project involved Trump: “and
then here we’re [going to] have a new development with the
Trump Organization of apartments and [a] commercial area”

1 In one day, Global Witness’ undercover investigator met with two representatives holding senior positions at Inversiones Aides Dominicana S.A.,
or Aides Real Estate Cap Cana, the resort’s exclusive brokerage firm. One representative was present for the entire meeting and the other joined by
phone on two occasions. Global Witness’ undercover investigator was given an extensive tour of the Cap Cana resort by the sales representative.

8
 1. Centro de Información y Ventas 6. Marina Cap Cana 12. Eden Roc at Cap Cana A map used to explain to Global Witness’
(Information and Sales Office) 7. Secrets Cap Cana 13. Eden Roc Beach Club undercover investigator that the Trump
2. Heritage School 8. Juanillo Beach 14. Los Establos Organization’s project will be located
between Sanctuary at Cap Cana (9)
3. Unibe Cap Cana 9. Sanctuary at Cap Cana 15. Scape Park at Cap Cana
and twin Hyatt hotel towers (H) under
4. AlSol Luxury Village 10. AlSol del Mar construction on Juanillo Beach (8).
5. AlSol Tiara 11. Punta Espada Golf Club © Global Witness

15

14

3
2

12

4
13
H 7 6 5
11 9 8
10

“So here is what I was telling

you about the new development
that [we are going to] have,
[it will be] like … Las Ramblas
street [where you have] the
street in the middle and
buildings on both sides….
[A]nd then it will come into this
beach, which is Juanillo Beach.”
Cap Cana sales representative,
October 2018

The Cap Cana sales representative compared the Trump Organization’s project to the
famous Las Ramblas pedestrian boulevard in Barcelona, where tourists and locals alike
flock to see and be seen. © iStock

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 9
Today, Farallón Estates at Cap Cana is empty dirt lots as seen in the above photo taken by a Global Witness investigator in August 2018
with a picturesque view of the Atlantic Ocean. © Global Witness

and “it’s right on the sea.” A December 2017 Dominican In 2007, through his company Trump Marks Real Estate LLC
Today news report links a Dominican project called “Condos (Trump’s company),2 Trump licensed his name to a “super-
de Playa Juanillo” to Trump’s company. luxury project,” that included Trump Farallón Estates at
Cap Cana.3 Before it failed, this project was supposed to
According to the representative, the Juanillo Beach project include 68 lots for mansions overlooking the Atlantic Ocean.
will include stores, restaurants and condominiums. It will be A number of property buyers were left with nothing and lost
located between a hotel called “Sanctuary Cap Cana” and millions when the development failed to get off the ground.
two Hyatt hotels that are currently under construction. And,
as soon the development was ready to sell, our investigator In May 2007, Trump, Eric and Ivanka traveled to the Cap
would be the first to know. Later in the discussion, the Cana resort to sell pieces of “paradise.” Potential buyers
representatives were more circumspect that this project is paid top dollar then to gain entrance to an exclusive party
a new deal for Trump, ultimately referring Global Witness’ for the chance to buy a lot at the Trump Farallón Estates at
undercover investigator to the Trump Organization. Cap Cana. Hopes were high as sales reached record levels:
More than $300 million in one day.
The Cap Cana resort, which includes Juanillo Beach, as
well as the Sanctuary, Secrets and the Hyatt hotels, covers The high did not last long. Soon after the 2008 financial
a swath of the Dominican Republic’s eastern coast that is crisis, the Trump Farallón Estates project failed. According
larger than Manhattan. The resort also offers polo grounds to a businessperson with experience working with Cap
and a Jack Nicklaus-designed golf course. Cana, S.A., “[The Hazourys, owners of the company] had
created a monster that was impossible to maintain”
The Cap Cana resort developer and operator is Cap Cana, around the same time they were negotiating the 2007
S.A., owned by the powerful and wealthy Dominican family, licensing deal with Trump. Even using millions in bonds
the Hazourys. and other financing would not have been enough to dig
them out of their hole, according to the same source. For
the Hazourys, potential profits from Farallón Estates were
HOW TRUMP’S FIRST DOMINICAN seen as a lifeline.
PROJECT FAILED After the project’s collapse the relationship between the
The Juanillo Beach project is not the first time the Trump Hazourys and Trumps deteriorated. In 2012, Trump’s
company has tried to do a deal in the Dominican Republic. company filed a lawsuit against the Hazourys and Cap
Indeed, it is not even the first time the company has tried to Cana, S.A. alleging in a court document that they had
do a deal in the Cap Cana resort with the Hazourys. committed “text book fraud on such a wide scale” and that
they failed to pay them over $14 million in fees under their
2007 licensing agreement for Trump Farallón Estates.

2 Here in after referred to as “Trump’s company.” Donald Trump owns both Trump Marks Real Estate LLC and the Trump Organization.
3 In this case, licensing one’s name is to obtain permission from a company (licensor) to use one or more products (the Trump name) within a defined market area.
In exchange, the company that obtains the rights (licensee) agrees to pay royalty fees to the licensor or original owner for the use of the product(s).

10
In a related court document, Eric wrote that the “biggest RESTARTING A TURBULENT BUSINESS
shock” came when he learned that Cap Cana, S.A. did not
have the money to continue paying them agreed licensing
RELATIONSHIP WITH A NEW DEAL
fees despite having collected millions in sales. The Trumps
demanded compensation amounting to $5.8 million and Today, despite this sordid history, representatives of the
the parties eventually settled in June 2013 for payments in Trump Organization, the Hazourys and Cap Cana sales
cash and in kind. Fulfilling the settlement agreement, Cap representatives swear that their past is just that, in the
Cana, S.A. gave Trump’s company cash and two property past. However, with reports swirling in the American and
lots located in what was supposed to be the Trump Farallón Dominican media about a potential new Trump project in
Estates as in kind payments. the Cap Cana resort, they have also been careful to stress
that they are just continuing the 2007 project. Our research
Today the Farallón Estates are nothing more than squares and undercover investigation suggest otherwise.
of dust with occasional wooden platforms propped up
throughout–platforms that were once meant to simulate It is likely that the Trump Organization and the Hazourys
for prospective buyers the view from a luxurious bathroom continue to emphasize that the deal is not new so that
or kitchen overlooking the blue sea. Not a single mansion Trump does not appear to contradict his pledge to pursue
was ever built. no new foreign deals while he is in office. Yet this pledge
appears only to be a construct of Trump and his team; a
A number of property purchasers who initially bought dishonest sales pitch to the American people about what
stakes in the doomed enterprise, including some who he will and will not do while in office that as we
invested their life savings and pooled money with friends demonstrate in this report, can have real consequences.
to be able to afford the investment, were left with nothing
and lost millions.
DEBUNKING THE TRUMP
ORGANIZATION’S CLAIM
THAT IT IS NOT A NEW DEAL

An unfinished, abandoned structure at Farallón Estates at Cap Cana in the

Dominican Republic. © Rose Marie Cromwell for Bloomberg Businessweek

Some attributes of the 2007 project at the Cap Cana resort

are consistent with other Trump-branded properties.
As Global Witness revealed in “Narco-a-Lago, Money
Laundering at the Trump Ocean Club, Panama,” many of
Trump’s licensing arrangements bear similar concerning
hallmarks. Many include partnerships and associations
with questionable or even criminal figures with shadowy In these December 2016 evening Tweets, President-elect Trump made public
some of his planned attempts to separate himself from his business to avoid
connections. Some projects have gone bust amid lawsuits conflicts of interest.
and disputes between developers, owners or tenants. Yet
Trump has frequently come out on top even when others
have lost out.

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 11
February 2007 September 2008 August 2012 Trump’s November 2016 January 2017 Trump
Trump’s company Financial crisis hits company brings a Donald J. Trump makes a pledge to do July 2018 Cap
and Cap Cana, S.A. lawsuit against Cap is elected as the no new foreign deals to Cana, S.A. receives
finalize a licensing Cana, S.A. and the President of the address conflicts of interest final Dominican
agreement for September 2008 Hazourys in U.S. court United States tax break approval
a super luxury Trump Farallón Estates seeking unpaid royalty
January 2017 Trump for the “Condos
project at the at Cap Cana begins to fail fees from the Trump de Playa Juanillo”
takes office as the
Cap Cana resort and eventually does fail Farallón Estates at Cap
President of the project
Cana project
United States

2007 2008 2009-2012 2013 2014-2016 2017 2018

March 2013 Trump’s February 2017 Eric Trump
May 2007 The Trumps and company and Cap Cana, visits the Dominican Cap
Cap Cana, S.A. begin selling S.A. finalize a Settlement Cana resort
lots at Trump Farallón Agreement (amended in
Estates at Cap Cana June 2013) ending the October 2017 The Dominican
August 2012 lawsuit government changes building
height allowances in the
October 2007 country’s eastern tourist region
Dominican tourism March 2013 Cap Cana, S.A.
ministry approves the gives two property lots at
master plan for the Farallón Estates to Trump’s December 2017 Cap Cana, S.A.
Cap Cana resort company as an in kind receives a new Dominican provisional
payment in accordance with tax break approval for the “Condos
their Settlement Agreement de Playa Juanillo” project

Trump has used the term “new” in his pledge to do no Second, assessing whether two projects are physically
new foreign deals while in office in order to avoid conflicts contiguous, or actually touching or connected, is a
of interest. Trump should know that in the U.S. there are determinant of a new and separate project. This is further
actually no established standards by which a real estate supported when the same person or entity does not own
project can be squarely characterized as “new” within the land between those two projects. The locations of
the context of conflicts of interest. Trump’s old Farallón Estates and new Juanillo Beach
projects are different. The two are separated by other
When asked about Trump’s December 2016 Tweets properties that are for sale, some of which have been sold
pledging to do no new deals by The New York Times, to third parties. They are not even particularly close to one
Richard W. Painter, a White House ethics advisor under another, about a five-mile drive.
President George W. Bush, stated, “[i]t makes no sense
to say ‘no new deals.’” Third, under provisions in the 2013 Settlement Agreement
with Trump’s company, Cap Cana, S.A. gave two plots of
Despite Trump’s pledge–and his company’s assertions land from Farallón Estates to Trump’s company as an in kind
that the project is a continuation of the 2007 deal–our payment. Global Witness analysis, based on consultation
investigation shows that Trump’s Juanillo Beach project with a legal expert, suggests that such a “carve-out”
bears certain hallmarks of a “new” development. Below
we set out features that collectively suggest that Trump’s DigitalGlobe © WorldView, 30 January 2018
current project in the Dominican Republic can be viewed
as a new deal.

First, one indicator of a new project is the role of Trump’s

BEANILLO

company in the deal. For example, during our undercover

CH
JUA

investigation, the Cap Cana sales representative told Global

Witness that the “Trump Organization” is going to be the
“developer” of the Juanillo Beach project. This stands in
contrast to the Trump company’s 2007 deal in which Trump FARALLÓN
licensed the use of his name for projects at the resort. In the ESTATES
AT CAP CANA
same 2007 agreement with Trump’s company, it was Cap
Cana, S.A. that was listed as “developing a luxury resort,”
not Trump. If Trump is now a developer, then he would Satellite photo showing the locations of Farallón Estates at Cap Cana and
appear to need a new agreement. the location of a new Trump Organization project on Juanillo Beach.

12
View from the 7Mares tower under construction toward the Hyatt hotels also being developed and the Trump Organization’s planned Juanillo Beach project
(the white beach center-right) at the Cap Cana resort captured by Global Witness’ undercover investigator’s hidden camera. © Global Witness

interrupted the continuation of the agreed project, DOMINICAN REPUBLIC

including Farallón Estates.
RECORDS CAST FURTHER
More specifically, under the Settlement Agreement DOUBT ON TRUMP’S CLAIM
(sections 4hh and 5b), Cap Cana, S.A. carved out two plots A look at these projects from the Dominican perspective
of land for Trump’s company as an in kind payment that also helps demonstrate that Trump’s project at Juanillo
could be developed by it independently, or sold. These Beach should be seen as new and separate from the original
plots were originally part of the larger project at Farallón 2007 projects.
Estates. But because the plots were given to Trump’s
company, the Settlement Agreement also gave it access to For example, those working on developments in the
certain amenities afforded to the rest of the lots in Farallón Dominican Republic such as Cap Cana resort, can be
Estates (e.g., utilities and road access). approved by the Ministry of Tourism for tax incentives and
exemptions. Many large tourism projects in the country
This amounted to a kind of legal separation of the two seek this approval demonstrating how important it is.
plots from the rest of Farallón Estates. According to a legal
expert, the existence of such separation suggests that any With this context, it is worth exploring whether, and if
subsequent Trump project within the Cap Cana resort could so when projects that may be associated with Trump’s
be treated as distinct or different from the Farallón Estates company have obtained the Ministry of Tourism’s approval,
project, and would not be a continuation of their original since this may suggest that his Juanillo Beach project is a
project plans. new deal.

While none of the above is conclusive, a determining factor According to Ministry of Tourism records, between 2002 and
of whether Trump’s latest Dominican deal is indeed new June 2018, no project with the Trump name on it received
could be found in Trump’s tax returns. Through his tax final approval for tax breaks.
returns one could see the extent to which Trump companies
originally doing business at the Cap Cana resort and However, in December 2017, Cap Cana, S.A. received a new
the entities now doing business there are related for tax provisional tax break approval for the project, “Condos
purposes. Unfortunately, Trump has famously refused to de Playa Juanillo.” This was less than one year after Eric
disclose his tax returns, despite 40 years of precedent. reunited with the Hazourys at the Cap Cana resort and his
father took office as the President of the United States. In

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 13
July 2018, Cap Cana, S.A. received final tax break Dillon explained that Trump would have no direct
approval for Condos de Playa Juanillo. knowledge of the business’ strategic moves. She also
stated that he would have no role in taking any new deals
Condos de Playa Juanillo is described in Dominican forward in order to avoid even the perception of a conflict
records as having three residential and three mixed blocks, of interest or any impression that the president’s office
as well as one commercial block. The Cap Cana sales was being exploited.
representative, when meeting Global Witness’ undercover
investigator, described several projects that are planned As described further below, regardless of whether the
in the area but only one that will have mixed residential Trump’s Juanillo Beach project is “new,” Trump-affiliated
and commercial blocks. The representative stated that business at the Cap Cana resort represents a conflict of
this project will be a “new development with the Trump interest that highlights the need for legal reform in the U.S.
Organization of apartments and [a] commercial area.”
But our investigation also shows that Trump’s
By July 2018 Condos de Playa Juanillo, a project likely Dominican business partners have obtained legally-dubious
associated with Trump, received its final tax break building permits from the highest ranks of the Dominican
approval which suggests that the project is not a government. At the same time, the government may also
continuation of the 2007 deal. have changed its building rules in a way that would benefit
both Trump and his partners. As a result, it is possible
that Trump has violated the U.S. Constitution’s
HOW TRUMP Emoluments Clause.

IS CONFLICTED
THE POWERS HIGH UP
In October 2018, the Cap Cana sales representative told
Global Witness’ undercover investigator that the Trump
In January 2017 when Trump announced at a news Organization could take the Juanillo Beach project forward
conference that he would not pursue new foreign and that the project had all the necessary permits.
business deals, his lawyer Sheri Dillon, who was tasked
with structuring the trust agreements concerning his “[T]he Trump Organization can do this... and
businesses, specified that: so, yeah, they’re [going to] do it... very soon.”
> Trump’s trust would continue to hold pre-existing Cap Cana sales representative, October 2018
assets, including Trump-branded and -operated
commercial rental property, resorts, hotels and rights In 2007 the Ministry of Tourism gave Cap Cana, S.A.–in other
to royalties from pre-existing licenses of Trump marks. words, the Hazourys–the right to bypass normal building
requirements when developing the resort. So long as
> Through the trust agreement President-elect Trump Cap Cana, S.A. followed a “master plan” that the tourism
ordered all pending deals be terminated. ministry had approved, the company had all the permits
it needed.4
> The trust agreement specifies that “no new foreign
deals will be made whatsoever during the duration of However, according to the Cap Cana sales representative
President Trump’s presidency.” interviewed by Global Witness’ undercover investigator, it
is actually the Dominican president who grants important
building permits.

Regardless of which senior official granted Cap Cana,

S.A. permits, the arrangement has been controversial.
According to a regional environmental government official,

4 As of 2007, the Cap Cana resort is developed under a master plan filed with the Ministry of Tourism. When asked by Global Witness, the Department of Planning at the
Dominican Ministry of Tourism said that Cap Cana, S.A. is allowed to use the land as it relates to the master plan. A Department representative also told Global Witness
that Cap Cana, S.A. decides who sees the master plan. One other large project in the country's eastern region, Punta Cana, has also been developed under its 2011 master plan.

14
 of Tourism issued a “clarification” to building laws. The
changes allowed developments in Macao, a town just
north of the Cap Cana resort, to reach as high as 22-stories
which is far higher than original height restrictions of four
to five stories.

Some suspect the height change was pushed through

to favor certain developers. An aide in the Dominican
tourism ministry told Fast Company that “[o]f course, it’s
on everyone’s mind—that this will help Cap Cana and help
Trump.” For example, Cap Cana, S.A. received tax approvals
for 17 towers at its resort under its master plan also to
reach as high as 22-stories, and as such, legal precedent
establishing in a nearby tourist town is likely to help quell
challenges to the Hazourys’ development plans at the
Cap Cana resort.
According to a local biologist and geologist, the development of towers
along the eastern coast of the Dominican Republic will negatively impact
Moreover, Bernardo Vega, a former Dominican
the environment, including damage to mangroves, wetlands, lagoons, ambassador to the U.S., has claimed that the Dominican
beaches and caverns. © iStock president and minister of tourism’s office have used the
Trump name to pressure the private sector to support its
height regulation change.
Hochi Echavarria, Cap Cana, S.A.’s deal with the Ministry of
Tourism sidestepped important oversight and was illegal.
Fast Company also reported that in some meetings with
regional politicians and hotel industry leaders, Dominican
Global Witness requested a comment from the Ministry of
government officials referred to the Cap Cana resort
Tourism about the illegality of such permits and received
generally as “the Trump project.” However, when asked by
no response.
the outlet, the Tourism Minister denied that “the Trump
Organization had anything to do with the height increase.”
Echavarria is not alone in his concern. “Permits granted to
Cap Cana and similar projects create a separate jurisdiction
If it is the case, as Dominican officials suggest, that height
that is a violation of the Dominican Constitution and land
restriction rules were changed to benefit Trump’s business
use regulations,” according to Carlos Morel, a legal expert
at the Cap Cana resort, this raises question as to whether
at the Instituto de Investigación Social para el Dasarrollo,
the U.S. Constitution’s Emoluments Clause has been
a local think tank.

According to Morel, “this arrangement also creates

problems with transparency, access to information,
environmental protection and urban planning.” Morel
also clarifies that “this is more than a legal problem—it
affects the model of sustainable development that a
modern state should have. In Cap Cana, the Hazourys are
left to do business as they would like, without fear of any
serious repercussions.”

It is not only Trump’s Dominican associates who have

gotten breaks under Dominican law, it is also possible
that the government has newly “clarified” the building
laws to benefit President Trump himself.

At a November 2018 event hosted by the Dominican Ministry of Tourism, Abraham

In October 2017–the first year of Trump’s presidency and Hazoury, member of the Board of Directors of Cap Cana, S.A., defended the
eight months after Eric’s most recent trip–the Ministry controversial decision to raise the height of buildings in the country’s eastern
coastal tourist region. © Ministerio de Turismo RepÚblica Domincana

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 15
For Americans to have faith in their government, it is essential that a sitting president or public official avoids private business – whether new or old – that may expose
them to actual or perceived conflicts of interest. Pursuing private business exposes the president to conflicts of interest risks while he is also making political decisions
that may benefit his business and him personally. © Visions of America/UIG via Getty Images

violated. The Emoluments Clause prohibits a U.S. president dynamics when mixed with the presence of a President
from accepting emoluments (a salary, fee or profit from Trump-affiliated business should concern Dominicans that
employment or office) from a foreign official. believe their government must be accountable to them.

Based on consultation with a legal expert, the building In response to our investigation, a spokesperson for the
height variance at the Cap Cana resort, sanctioned by Trump Organization said: “The story is completely false.
the Dominican government provides Trump with greater The Trump Organization has no plans to either develop or
opportunities to profit, which could be considered an license its brand with respect to any new real estate project
emolument under current U.S. law. This is particularly the in the Dominican Republic. In 2007, the company entered
case if Trump receives more than a one-time payment, such into a license agreement with a local developer for a multi-
as a percentage of real estate sales and other related fees component real estate development project to be built over
and royalties under a licensor agreement. According to the several years. Though there have been some discussions
legal expert, if the building height variance in the Cap Cana about starting the next phase of the development, there
resort, reinforced by the change of law in Macao, increases are no plans in place at this time.”
the opportunity for Trump to profit, then there are
grounds for a potential violation of the U.S. Constitution’s
Emoluments Clause. WHERE DOES THE TRUMP
Global Witness is not currently aware whether any Trump-
ORGANIZATION END AND THE
related project in the Dominican Republic—including the TRUMP ADMINISTRATION BEGIN?
Juanillo Beach project—enjoys increased prospective
profiting opportunities for Trump as a result of the 2017 New or old, Trump’s business in the Dominican Republic
height restriction change. poses a conflict of interest for him and for the American
people as his business interests and the foreign policy
The tourism ministry’s “clarification” of Dominican law also interests of the U.S. may not always align.
raises questions whether, thanks to Trump, the Dominican
government is acting in the interest of the country’s people However, this is not illegal. American law preventing the
or the U.S. president. The Dominican Republic is a small president from becoming embroiled in such conflicts of
Caribbean island that exists in the shadow of the U.S.’ interest–particularly related to their private business–
political and economic influence and is heavily dependent should be created to set clear boundaries for their
on tourism for its economic well-being. Such power professional and personal activities.

16
Members of Congress, as well as bipartisan legal and ethics
experts have not been satisfied with the measures Trump RECOMMENDATIONS
has taken to avoid conflicts by separating himself from
his businesses. Americans have more to learn about whether and to
what extent conflicts of interest played a role in the
Trump Organization’s business dealings in the Dominican
“Without a full and complete divestment Republic or elsewhere. We also need to know whether
of financial conflicts of interest, the government policies in the U.S. and other countries
American people will not be able to tell have been influenced by Trump’s business and whether
principles of democracy and transparency in the U.S. and
where the Trump Organization ends and abroad have been undermined from the highest offices.
where the Trump administration begins.”
Senators Elizabeth Warren, Bob Casey But regardless of what is learned, a deeper truth seems
apparent–conflicts of interest rules are not simply
and Tammy Baldwin joint statement, procedural exercises we pay lip service to; they are at the
January 2017 heart of what public service means in America and beyond.
If we want to honor that tradition, the rules governing the
president must be updated for the 21st century, both to
According to legal and ethics experts, for 38 years each respond to the challenges posed by the Trump presidency
president has sold off his holdings and handed his and future occupants of the Oval Office.
assets over to independent third parties to manage—
creating actual blind trusts—even though there is no The United States should ensure that it has in place
legal requirement to do so. A true blind trust reduces effective ethics controls, including that the president and
the appearance of conflicts of interest by shielding the vice president address foreign and domestic conflicts
president from information about where the company of interest and are held accountable under the U.S.
is doing or may do business. Constitution. More specifically:

Yet under Trump’s current business arrangements, he and Recommendation 1: Requisite authorities should
his company are not totally separated and he can still draw investigate these allegations and, if appropriate, hold
income from the Trump Organization. Moreover, he can the Trump Organization, Donald Trump and his family
learn about his company’s holdings and where it stands members accountable for their actions. Congressional
to make money. committees looking into such issues should likewise
investigate these allegations and, if appropriate, hold
Simply put by Walter Shaub, former Director of the U.S. the Trump Organization, Donald Trump and his family
Office of Government Ethics (OGE), in his afternoon members accountable for their actions.
statement following Trump’s January 2017 press
conference: “This is not a blind trust—it’s not even close.” The Trump Organization’s business in the Dominican
Republic has spurred questions about the relationship
Richard Painter, a former top ethics lawyer for the George between the U.S. president and Dominican officials. In
W. Bush White House joined over a dozen public interest particular, whether Dominican officials changed rules
groups and several former GOP elected officials in a so that buildings could be constructed higher to benefit
December 2016 letter to Trump. In that letter they expressed a Trump company project. These changes should be
concern to Trump that “[b]y combining your presidency investigated to determine if they represent an
with your family business, you will create ongoing conflicts emolument to the president and thus a violation
of interest and credibility problems for your presidency.” of the U.S. Constitution’s Emoluments Clause.

Reflecting these concerns, Shaub clearly made OGE’s Recommendation 2: Congress should pass legislation
primary recommendation that Trump divest his conflicting that ensures the president and vice president address
financial interests and that nothing short of that would actual and perceived conflicts of interest. Such
resolve his conflicts. Even still, Trump’s lawyers insist that legislation should, at a minimum, require the disclosure
all necessary measures have been taken to separate him of business records, including and specifically tax
from the Trump Organization.

A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 17
returns, transfer of all relevant financial interests into Moving forward, to avoid conflicts of interest and to protect
a blind trust and that certain profits resulting from a the best interests of Americans and other people around the
conflict of interest be turned over to the U.S. Treasury world, Trump-affiliated companies should provide Congress
Department. and the U.S. Treasury with a complete record of profits from
foreign governments. This would allow Congress to exercise
Ethics rules have long governed top officials in the effective oversight, and if necessary, empower the Treasury
administration and Cabinet members but exempt the Department to reclaim these profits.
president and vice president.

There are no laws prohibiting an American president from

continuing to be involved in private business matters. There
are also no laws to keep the president from promoting
his business while in office. Barring outright bribery or
receiving gifts, there are no laws to prevent the president
from financially benefiting from official acts or conflicts of
interest. This raises serious ethics concerns among some
lawmakers and many Americans.

Therefore, Congress should pass legislation that requires

that divestment or the transfer of assets to a blind trust
occur very shortly after the president and vice president
assume office. Moreover, the spouse and children of
these members should also divest or transfer to a blind
trust all interests that create actual or perceived financial
conflicts of interest. All assets must be either divested
from or placed in a true blind trust and managed or sold
by an independent, third party. Any violation should
be considered a high crime or misdemeanor under the
impeachment clause of the U.S. Constitution.

Recommendation 3: To address current conflicts of

interest and prevent the president from further profiting
from his office, Trump should be required to turn over
all relevant proceeds to the appropriate authorities.

Trump has pledged to donate certain real estate profits

made from foreign governments at his properties to the U.S.
Treasury Department as a step toward distancing himself
from any conflicts of interest resulting from his business.
Experts suspect that this pledge was made in order to quell
concerns that Trump is violating the U.S. Constitution’s
Emoluments Clause, banning the president’s acceptance
of foreign gifts and money without Congress’ permission.
Despite the Trump Organization’s refusal to disclose the
amount donated in 2017, The Daily Mail first reported
that the company donated $151,470—the U.S. Treasury
confirmed receipt of a check but did not comment further.

18
A FOREIGN AFFAIR: Conflicts of Interest in the White House and Trump’s Dominican Republic Deal 19
 This report is published by Global Witness Inc.

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