This is a screenshot showing the page for a Trump-branded luxury resort development in Indonesia. Screenshot Trump Hotels
This is a screenshot showing the page for a Trump-branded luxury resort development in Indonesia. Screenshot Trump Hotels

Politics & Government

Despite pledge, Trump company works with a foreign entity. Again.

By Anita Kumar

akumar@mcclatchydc.com

December 04, 2017 02:00 AM

UPDATED December 01, 2017 11:32 AM

WASHINGTON

A construction company owned in part by the governments of Saudi Arabia and South Korea plans to build a Trump-branded luxury resort development in Indonesia despite a vow from Donald Trump that his family business would not make any deals with foreign government entities while he serves as president.

Trump’s partner, MNC Land, recently entered into a preliminary agreement with Posco E&C Indonesia to become the main contractor for the first phase of the development — billed in promotional material as a “Trump Community” that includes a Disney-like theme park, a six-star hotel and a golf course.

MNC Land, through its subsidiary PT Lido Nirwana Parahyangan, and Posco E&C Indonesia officials signed a memorandum of understanding on Nov. 11 at a ceremony in Jakarta that was attended by several high-level government officials from Indonesia and South Korea and was widely covered in the foreign media.

“We are building a 6-star hotel in cooperation with Trump Hotel Collection and following golf course and golf park as well,” Andrian Budi Utama, managing director of the MNC project called “Lido City”, said at the ceremony. “This is the purpose of today and this event.”

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Posco E&C Indonesia is a subsidiary of Posco E&C, which is partly owned by Saudi Arabia’s three-decade-old Public Investment Fund. That fund acquired 38 percent of Posco E&C in 2015, becoming the second-largest shareholder, as part of a deal that calls for the company to work on infrastructure projects commissioned by the Saudi government. As a result, the fund recommended two members to the company’s six-member board: Ahmed Al-Subaey, an executive with Saudi-owned oil giant Aramco, and Mohammad A. Abunayyan, chairman of Saudi-based ACWA, a developer of power generation and desalinated water production plants.

Posco E&C is an affiliate of Posco, which is partly owned by the governments of Saudi Arabia and South Korea, according to the company’s independent auditors’ report dated March 2. South Korea’s public pension fund owns 10.88 percent of Posco. The Saudi Arabian Monetary Authority, the central bank of the Kingdom of Saudi Arabia that issues national currency, owns 2.38 percent of Posco. The financial news website 4-traders provided the same information on its most recent company profile.

A sign that says the land is owned by MNC Land is erected on a farming field near Gunung Gede Pangrango National Park in Bogor, West java, Indonesia. A sprawling "Trump Community" will rise next to Gunung Gede Pangrango National Park.
Tatan Syuflana AP

This Trump International Hotel and Tower Lido project is the latest example of a slew of potential conflicts of interest Trump faces as he serves as president while continuing to own his vast real estate empire. McClatchy reported in September that a major construction company owned by the Chinese government was awarded a $32-million contract to build a six-lane road as part of the residential piece of the Trump World Golf Club Dubai project.

This, after the Trump Organization agreed to not engage in any new foreign deals or new transactions with a foreign entity — country, agency, official, sovereign wealth fund or member of a royal family — other than “normal and customary arrangements” made before his inauguration. It withdrew from some projects, including those in Argentina, Georgia and India, but kept others, including those in Canada, the United Arab Emirates and Uruguay.

"Donald Trump adalah partner saya di proyek Lido, Bogor dan Bali Nirwana Resort," -HT- pic.twitter.com/Yu6Bjs1rgQ

— Hary Tanoesoedibjo (@Hary_Tanoe) December 19, 2016

Trump ignored calls to fully separate from his business interests when he was sworn in as president, instead placing his holdings in a trust designed to hold assets for his “exclusive benefit,” which he can receive at any time. He also retains the authority to revoke the trust.

Walter Shaub, who served as the director of the Office of Government Ethics until July, said it was a “foregone conclusion” that Trump would have numerous conflicts of interests after he made the decision to retain his business. “Just about every decision he makes puts him under cloud of suspicion,” Shaub said. “It became inevitable because he didn’t sell. It’s precisely why he should have divested.”

Now every time his company does business in a foreign country or with a foreign entity, Trump faces a fresh set of questions: Is a foreign government gaining access to him because of his business? Is the business deal a factor in U.S. foreign policy? Is a foreign government building goodwill with him because of his company?

Prior to the election it was well known that I have interests in properties all over the world.Only the crooked media makes this a big deal!

— Donald J. Trump (@realDonaldTrump) November 22, 2016

The U.S. Constitution says officials may not accept money, gifts or titles of nobility from foreign governments, and that no benefit should be derived by holding office.

Ethics experts, including those involved in three separate lawsuits accusing Trump of violating the so-called emoluments clause of the Constitution, say the latest agreements with Posco could violate the law depending on what kind of influence the foreign governments have on the company and whether the Trump Organization is receiving a benefit.

Richard Painter, who served as a White House ethics lawyer under President George W. Bush, said even if the Posco deal is not covered by the Constitution “it’s very problematic for the president” because it raises questions about whether Trump is acting on behalf of his company or the presidency when he makes decisions.

Budi Rustanto, vice president director of MNC Land, said in an email that his company focuses on a business’ “credentials and proven performance track of record to build” when selecting a contractor and that no “third parties should interfere in the selection process.”

He also stressed that the agreement between MNC and Posco officials is at still at memorandum-of-understanding stage and is subject to the fulfillment of certain terms and conditions. “The MOU signing...is basically an intention to cooperate in the preparation to construct the Trump Hotel & other development components in Lido,” he wrote.

An official with the Trump Organization, which is run by the president’s adult sons, declined to speak on the record. Posco and the governments of Saudi Arabia and South Korea did not respond to questions.

Last December, Trump downplayed potential conflicts of interests with his business. “It’s not a big deal — you people are making it a big deal, the business...” he told reporters at his Florida resort Mar-a-Lago. “They all knew I had big business all over the place.”

In this case, like many others the Trump Organization is involved with, the company does not own the development but rather licenses its name and manages the resort. The Trump Organization earned between $1 million and $5 million from Lido City in 2016 and the early months of 2017, according to financial disclosure statements filed with the federal government in June.

The Trump Organization announced its partnership with MNC on the Lido City development in 2015. It formed a corporation to manage the project in June of that year just as Trump announced he planned to run for president. Construction had barely begun when he was elected in November 2016.

Being on board at this early stage ensures the Lido development will reflect Trump Hotel Collection’s exacting standards and keen attention to detail

Trump Organization executive Donald Trump Jr. in 2015

Other foreign entities had signed onto the development before Trump became president. Korea Land and Housing was hired to develop a township near the resort. The China Metallurgical Corporation Group was selected to prepare a design for the project. Chinese Export and Credit Insurance Corporation agreed to provide some of the financing.

The 1,730-acre development, to be set within the tropical forests of the mountains of the province of West Java, will include a theme park, hotel, villas, condos, country club and spa. An 18-hole golf course will be designed by South African golf great Ernie Els.

“Set within the lush tropical forests of the mountains of West Java, approximately 65 kilometers south of Jakarta, the ultra-luxury resort will offer residents a luxurious retreat within a short distance, yet a world away from the hustle and bustle of the city,” the Trump Organization boasts on its website.

Media Nusantara Citra (MNC) Group President and CEO Hary Tanoesoedibjo gestures during an interview with The Associated Press in Jakarta, Indonesia. President Donald Trump's billionaire business partner and possible political proxy in Indonesia nurses big leadership ambitions in his country, which he says isn’t developed enough to have a successful democracy and needs strong leadership.
Achmad Ibrahim AP

Hary Tanoesoedibjo, MNC’s billionaire president, has been called the Donald Trump of Indonesia. He unsuccessfully ran for vice president in 2014 but founded a new political party in the hopes of possibly running for president. He and his wife attended Trump’s inauguration, where they were given special access to the festivities.

“We share the same background as businessmen,” Hary said in a February interview with Tempo.com. “We click, and we can come to an agreement fast. He is the type of person to make quick decisions.”