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  February 17, 2017

Trump's Tax Returns Key to Clarifying Russian Connections


Economist James Henry explains why we should take Deutschebank's findings about Trump's assets with a grain of salt
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biography

James S. Henry is an investigative economist and lawyer, a Global Justice Fellow at Yale University, and a Senior Advisor at the Tax Justice Network. Previously, James served as Chief Economist at the international consultancy firm McKinsey & Co. As an investigative journalist his work has appeared in numerous publications like Forbes, The Nation and The New York Times.


transcript

Trump's Tax Returns Key to Clarifying Russian ConnectionsSHARMINI PERIES: It's The Real News Network. I'm Sharmini Peries, coming to you from Baltimore.

Financial giant, Deutsche Bank, says it has found no connection between President Donald Trump's personal assets, and the Russian state. The Frankfurt based company was pressured in January, to review Trump's finances in the weeks after it paid $630 million, to settle charges of laundering $10 billion for Russian investors.

Deutsche Bank is no stranger to financial fraud and illegal transactions. It has paid out billions to settle charges, including the libel rate manipulation scandal, mortgage backed securities fraud in the United States, and violations of sanctions with Iran and Syria.

Joining us to discuss this latest bank controversy involving Trump, and his empire, is James Henry. James is a leading economist, attorney, and investigative journalist, who has written extensively about global issues. Thanks so much for joining us again, James.

JAMES HENRY: You're quite welcome. It's good to be with you.

SHARMINI PERIES: So, James your reaction to the Deutsche Bank's claim that Trump's accounts have no connection with the Russian state?

JAMES HENRY: Well, I didn't read the story that way. I think they were a little bit reluctant to talk about what they'd done. And it's not clear how extensive the reviews have been. I mean, the odd thing is, that Deutsche Bank has basically, for a very long time, been the only, you know, sort of first world bank that has loaned Donald Trump any money, ever since the '90s when he had six bankruptcies.

And he basically upset all of the major Wall Street banks, so it was only really Deutsche Bank that would loan to him. And it's always been kind of a puzzle because, you know, he's treated them very badly. And in 2010 he sued them for $3 billion, over claiming that they were responsible for the financial crisis. And you know, it's been a rocky road, but so, people have always wondered. I mean, Deutsche Bank today has about $300 million out of the total $650 million the Trump organization has in debt. And they also have quite a few loans out to his family members, like Jared Kushner.

So, you know, it's a puzzle, they have a long-standing relationship. I think it's partly on the private banking side. We don't know much about that. Anyway, I would take this finding with a grain of salt, because we just, you know, we're not allowed to look at the documents. What I can tell you is that in other domains, Deutsche Bank has a long history of laundering Russian money.

They've just been tagged with this $630 million fine, for laundering $10 billion of Russian dirty money, and using the Moscow office and the New York office to do that. The current Secretary of Commerce nominee, Wilbur Ross, it turns out, was Vice Chairman of a little bank in Cyprus that has a lot of Russian money in it. And you know, he chose... he's the Vice Chairman of that bank.

He invested a billion dollars in the bank, and who did he make the new Chairman of the Bank of Cyprus? Which is one of the biggest Russian laundromats in the word, you know -- Joseph Ackerman, who ran Deutsche Bank during this whole period of incredible criminality. During which they had, you know, done everything from facilitating tax dodging, and sanctions busting, to mortgage fraud, you know, the money laundering stuff, sanctions busting, the... You know, just an endless number of criminal offences. I think they've paid now, nearly $20 billion in fines, and the bank has really been hurting as a result of this. And yet, Ackerman now has been recruited by this guy, Wilbur Ross -- who's very close to Trump.

So, you know, I was trying to sort all this out. I think, it's not some grand conspiracy, but it is unusual for a big bank like Deutsche Bank to be so heavily geared to a real estate developer, who's never really been that successful.

SHARMINI PERIES: And I must say, James, you wrote a very interesting investigative article at the end of 2016, detailing Trump's connection with the Russian oligarchs. You included a 2008 quotation from Trump's son, in which he told Manhattan Conference, that former Soviet Union investors backed a lot of real estate projects for the Trump organization. Lay out for us what they were, and how did they connect all of these investments?

JAMES HENRY: The interesting story I was telling was, that you know, how do we get Trump and Putin at the same time, to come out of the woods here? And I traced it back to this period of real economic decline in the 1990's, when all kinds of capital flights started pouring out of Russia. And that proceeded to continue, as Russia became more and more of an autocratic country under Putin.

So, you know, that helped to finance people like Donald Trump, who was able to provide an outlet for money laundering, basically. A lot of Russian capital flowed into lousy projects here, and we suspect that, you know, the investors really weren't looking that carefully. My article, "In the American Interest," you know, is a little bit hard to summarize, but I go through five or six different cases, where there are just all these very strange connections between the Trump crowd and all of these, you know, basically a lot of Russian oligarchs, mobsters and outright crooks.

So, I think, the more we know about this situation, the more we say -- at the very least -- the President has not been very discriminating about the people he does business with.

SHARMINI PERIES: Right. And James, you're a part of the Tax Justice Movement. Do you think there's something in Donald Trump's tax records that would tie him to some of this activity, and that's why he's avoiding releasing them?

JAMES HENRY: One of the things a tax return shows you is loans, because you have to have interest deductions. So, if he has offshore companies that are not traded, they're not publically visible, and yet he's taking a lot of deductions for, you know, some of the money that's being channeled to them, or through them, that would show up on the tax returns. And so you'd get a lot more resolution, in terms of figuring out what the whole network of the guy's business relationships are internationally. And he has an extraordinary number of companies offshore. I think he has 126 LLCs in Russia alone.

Now, many of those are just, you know, for protecting his brand, but we don't know until we look at the tax returns. He has, basically not been straight with the public. He says he can't release returns that are under audit. That's just not true, but secondarily, all of his returns from 2008 back have already been audited, and it would be valuable -- even if we just had one single 2008 return -- to look at, to expose some of these things.

So, you know, there's something disingenuous about the President's position on this issue. I wish he'd just get beyond it, because ordinary Americans just don't understand how there can be this lack of transparency.

SHARMINI PERIES: Right. And the Bank Trade Association, James, called the Clearing House, just released a new report that calls for the easing of anti-money laundering regulations. They claim that the reports that they are legally obliged to file, regarding criminal transactions, are too much of a burden for them. What do you make of that?

JAMES HENRY: I think that's just apologetics. I mean, they are, you know, I'm waiting for the day when the financial services industry actually steps forward and says, we'd like to do something to curb money laundering. That day hasn't come. I mean, I'm fairly knowledgeable about this whole area, and basically; we've made some progress in the last decade.

The Trump Administration is on the verge of just rolling these things back, and they have a project in place that Obama put in place, to try to learn who the beneficial owners of real estate in major cities like, New York and Miami, are. And reportedly, Trump is going to repeal that. They just eliminated the requirement that was established in 2009, to have big oil companies publish what they pay to developing countries.

They have made no progress at all, toward the whole movement to get more transparency, with respect to automatic information exchange, and beneficial ownership -- things that are, you know, sound technical, but they're relatively simple to do, and a lot of really poor countries would benefit from such reforms. But I don't see this administration taking any steps or prioritizing those kinds of policies.

SHARMINI PERIES: Right. And then just to clarify, what is this Clearing House, it's an association of bankers? And who's in it?

JAMES HENRY: Well, I think the Clearing House has traditionally been places where the banks kind of, on a wholesale basis, settle their daily, you know, transactions with each other. And they do that through a central meeting point, rather than going individually to every other bank in the world.

And you know there are a number of famous clearinghouses. There's the case of Clear Stream in Luxembourg, where there was, they actually had a double set of books, and some people were having secret accounts. So, you know, it's important for us to understand clearinghouses. It sounds like a fairly technical area that's known only to banks. But the public at large has a stake in making sure there's a lot of transparency there too.

SHARMINI PERIES: And then members of this association, Clearing House, includes apparently, Bank of America, Citigroup, Deutsche Bank, and HSBC -- all those who are tied up in this scandal. So, any advice or policy advice from them should be of suspect?

JAMES HENRY: I added up the top 22 banks in the world, between 2000 and 2015 -- they committed something like 650 financial crimes of all kinds. You know, sanctions busting, and facilitating tax-dodging and mortgage fraud, and so on and so forth. They paid for that, a total of nearly $300 billion in fines, as of the end of 2016.

But it's had very little effect on their behavior. I think until we go back to actually sending individual bankers to jail, we're not going to have much progress on this transparency. And the industry just relentlessly makes this argument about, you know, trying to reduce costs.

And, you know, these regulations do have some costs associated with them, but the greater benefit to the public, I think is pretty well established. Just ask any law enforcement official.

SHARMINI PERIES: All right, James, I thank you for now, and am looking forward to unravelling that extensive report, investigative piece you did about Trump and the Russian connection. Thank you so much for joining us today.

JAMES HENRY: Great. Thanks very much.

SHARMINI PERIES: And thank you for joining us on The Real News Network.

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