Trump Organization Revives Project In Dominican Republic, Roiling Local Politics
• Feb 07, 2018
Marcus Baram, Fast Company
For President Trump, Haiti may be a “shithole.” But on the other side of the island is a country that he clearly thinks could be a goldmine—and a potential windfall for his family’s business empire.
The Trump Organization is close to an agreement in the Dominican Republic with a developer to partner on a project on the east coast of the island, sources on the island tell Fast Company. That’s despite Trump’s promise to avoid any new overseas deals while in office, which was intended to avoid potential conflicts of interest such as foreign governments and companies attempting to win favor with the Trump administration. The Trump Organization’s lawyers have insisted that it’s not a new deal but just consistent with an existing licensing deal that the company signed with a local developer back in 2007.
The company’s lawyer, Alan Garten, emailed: “Trump at Cap Cana is a phased project to be developed over time.”
Just last month, Trump’s partner on the island, the powerful Capa Cana Group, was granted permits and financial incentives to build 17 towers, including the Condos Playa Juanillo project, which has reportedly been linked to the Trump Organization. Ricardo Hazoury, who runs the Cap Cana Group and signed the original deal with Trump, did not return requests for comment. And Garten only replied: “Over the years we have discussed moving forward with additional phases but nothing was ever finalized.”
But the project has stirred up plenty of controversy on the island, due to a proposal requested by the Cap Cana Group—and supported by the Dominican government—to dramatically increase the long-standing height restrictions of buildings on the coast, from 4 stories to 22 stories. The higher height limit would be a big benefit for hoteliers, who could then pack more high-priced condos into them. For decades, the island has insisted that buildings in that area not exceed the height of the coconut trees, a regulation meant to preserve the natural beauty of the region.
When the island’s tourism ministry introduced the proposal, apparently without any environmental impact assessment, it was greeted with widespread condemnation. (By coincidence, one of the hoteliers opposed to the proposal, the Punta Cana Group, hosted former President Bill Clinton this week for a visit.) “For decades, Punta Cana has been a development in harmony with its environment—but putting up high-rises on the beach would change everything and turn it into Cancun,” says Roberto Alvarez, the former Dominican ambassador to the Organization of American States.
Government sources say the debate over the proposal, and the decision whether to grant approval to the Trump-affiliated project, has reached the highest levels, including the office of Dominican President Danilo Medina. “Of course, it’s on everyone’s mind—that this will help Cap Cana and help Trump,” an aide in the tourism ministry tells Fast Company. As an indication of its outsize influence, government officials have referred to the entire Cap Cana development as “the Trump project” during meetings with regional politicians and hotel industry leaders.
“Here in the palace, the president’s thoughts are that this U.S. president is angry and we better not get in his way,” says Bernardo Vega, the former Dominican ambassador to the U.S. “We don’t want to cross him.”
FROM UGLY LAWSUIT TO HANDSHAKES AND SMILES
Just before his inauguration, Trump’s attorney announced at a press conference that “No new foreign deals will be made whatsoever during the duration of President Trump’s presidency.” So when Eric Trump flew in to visit the island and pose for pictures with the Cap Cana Group’s owners less than two weeks after his father took the oath of office, it raised plenty of eyebrows.
At the time, the Trump Organization’s counsel Garten insisted that any project in the Dominican Republic would not be considered a new deal, citing the 2007 deal with the Cap Cana Group. In those years, the Dominican company sold millions of dollars worth of condos at Farallon Trump at Cap Cana, a resort the partnership was developing—the resort was even featured on the sixth season finale of The Apprentice—but the project foundered amid the financial recession and an ugly lawsuit filed by Trump against the Hazourys in 2012.
Trump accused the family of “textbook fraud” over allegedly hidden property sales, and a Hazoury brother wrote to Eric Trump that the resort’s finances were “precarious on the best of days and more akin to bungee jumping.” Eventually, the two sides settled their differences. Since then, the project has been dormant, with weeds sprouting through some of the foundations laid for the much-anticipated luxury project.
Now, with Trump in office, and his family’s company exploring a reengagement of that deal, the circumstances surrounding the current plans for Cap Cana have lent themselves to widespread speculation. Though the height-increase proposal was introduced in October, it was only made public the week before Christmas, when news readership typically drops off. Only a week after the height-increase proposal was disclosed, the financially troubled Cap Cana Group announced that it was restructuring its debt for $364 million. The deal was arranged by A.J. Mediratta of Greylock Capital, who also restructured the debt of Trump’s Ocean Club project in Panama in 2013.
In gratitude for the restructuring, Cap Cana executives thanked Dominican President Medina, his tourism ministry, and “important groups of international and national investors at this moment are developing large projects within the aforementioned destination.” Mediratta declined to discuss the circumstances of his involvement in the Cap Cana deal.
Ethics experts point to the Dominican deal as “one more example of a foreign entanglement for the Trump business empire that creates conflicts of interest,” according to Richard Painter, who was the chief White House ethics lawyer during the George W. Bush administration. The White House press office did not reply to a request for comment.
ACCUSED OF BENDING OVER BACKWARDS
The potential Trump development is politically sensitive in the Dominican Republic since Trump’s policies have been widely viewed as harmful to the country’s economic interests, from the potential return of thousands of Dominican “dreamers” to the repatriation of capital under the just-signed U.S. tax bill.
Despite that, the current Dominican government is being accused of bending over backwards to accommodate its powerful neighbor to the north. Dominican President Medina, who was humiliated when Trump declined to meet with him last October, “wants the Trump family to invest in tourism in our country, and for that has forced the Minister of Tourism to change the rules” and allow high-rises on the beach in Cap Cana and Punta Cana, claims Vega, the former Dominican ambassador.
In a hard-hitting recent column for a local newspaper, Vega wrote, “In order to convince Mr. Trump, whose presidential initiatives have caused us so much pain, to lend us his name (not his money) on 20-story buildings, our own president has modified the construction norms which have been responsible for the success of our tourism industry.” Vega also claimed that the island’s lobbyists in Washington, who are closely tied to Trump, seem to have a dual agenda and have nudged the Trump Organization to invest in the island.
Brian Ballard, whose firm Ballard Partners signed a one-year contract worth $900,000 last year to lobby for the island, is a longtime friend of Trump’s. He worked as the Trump Organization’s lobbyist in Florida for years before becoming that state’s finance chairman for the Trump campaign. Since setting up shop, Ballard has hired other Trump associates, including Susie Wiles and Dan McFaul. Wiles spearheaded Trump’s victory in Florida at the height of the primary, calling herself the state’s “senior strategist” for the Trump campaign, and McFaul was a key member of Trump’s transition team, vetting nominees for Pentagon and intelligence positions.
Another of Ballard’s hires was Otto Reich, a former Reagan-era official who gained notoriety for his lobbying efforts on behalf of the contras in Nicaragua. The longtime foreign policy expert traveled to Santo Domingo last spring to have lunch with business groups, including the powerful association of hotel owners, telling them that President Trump has a strong interest in tourism and greatly values the tourism sector of the economy, industry sources tell Fast Company. Reich, who says his representation of the Dominican Republic ended in October, clarifies: “I did not speak on behalf of President Trump, whether about hotels or any other issue, since I have never spoken with the President.”
Ballard strongly denies Vega’s claim, writing to Fast Company in an email: “Sorry. I have nothing to do with it. Fake news even in the DR!” (He included a smiley-face emoji at the end of the comment.) The country’s tourism minister also flatly denied that the Trump Organization had anything to do with the height-increase proposal, though he refused to answer over a dozen requests for comment.
Vega now says that he was misinformed about the exact role of the Trump Organization, clarifying that the country’s tourism minister used the name of the Trumps to pressure the private sector into supporting the proposal “and not because they have decided to invest.” He notes that President Medina is torn between pleasing Trump, since the United States wields a great deal of influence over its small neighbor, and his constituents, who have been offended by Trump’s comments about immigrants.
Painter notes that it’s also an ethics problem for the Dominican Republic, saying, “But to have U.S. public officials, as opposed to just U.S. companies, causing foreign governments to behave this way–in part to ingratiate themselves with our president–is very disturbing. The message is that you should destroy your environment for the benefit of the Trump organization as a way to get your country off the White House ‘s–thole list.'”