Does Turkish President Recep Tayyip Erdogan Hold Financial Leverage Over Donald Trump?

While some proclaim Trump to be Putin’s puppy, the evidence supports the greater likelihood that he has been, and will continue to be in the near future — Erdogan’s errand boy.

The recent New York Times(NYT) in-depth report and tax return analysis of Donald Trump’s businesses over the past fifteen years depict an extremely weak financial posture on the part of the President, to the point of vulnerability. Trump’s sustained financial losses, decreasing cash flow, and burgeoning debt may provide leverage to the Turkish strongman who can manipulate Trump and therefore the U.S. via a variety of financial carrot and stick options both overt and covert.

Why does it matter?

Turkey and therefore its leader Erdogan — has become a potent regional power in Central Asia and the Mid-East due to its strong economy and growing military power. Located proximate to Iran and southern Russia, Turkey borders Syria and Iraq and is geographically placed directly across the Black Sea from Ukraine.

Erdogan has flexed his military muscle in the enduring bloody Syrian conflict as well as intervening in the Libyan civil war. Turkey is now positioned as a major power broker in the Nagorno- Karabakh powder keg fixing to explode into a major conflagration between Armenia and Azerbaijan.

Turkey is a member of NATO but its loyalties to Western objectives are suspect given its oppression of Kurdish minorities, facilitation of Iranian sanctions circumvention, and the procurement of the advanced Russian anti-aircraft systems known as S-400 subsequent to its procurement of the U.S. advanced fighter-jets known as the F-35.

While it is easy to question the above Turkish actions we must note that most have occurred without reprisal since Trump was elected President in November of 2016. The NYT report has taken detailed note of Trump’s personal financial weakness during this time and the question can be raised as to whom was leveraging whom during this period of time. To this point, former FBI Director James Comey testified remotely before the Senate Judiciary Committee recently that -

“A person’s financial situation could make them vulnerable to coercion by an adversary and allow an adversary to do what we try to do to foreign government officials we find are indebted, which is to try to recruit them to our side.”

While the NYT and other media have rightly pointed out that the Mueller investigation of Trump and the FBI did not conduct a full “follow the money” type of investigation relative to Trump’s financial dealings with Russia, Congressman Raja Krishnamoorthi is pressing the Director of National Intelligence(DNI) John Ratcliffe and his predecessor, former DNI Dan Coats to detail whether Trump’s personal debts and loans could be exploited by foreign adversaries(plural).

A point of clarification and some context is needed here with regard to ‘leverage’ relative to Comey’s reference to a person’s financial situation vis a vis — coercion by an adversary, as well as the Congressman’s reference to “exploitation by foreign adversaries.”

Recall the story by author David Cay Johnston regarding the infamous hotel room meeting arranged by Roy Cohn between Trump and Anthony ‘Fat Tony’ Salerno — head of the Organized Crime group known as the Genovese family. Trump was looking to build the Trump Tower in Manhattan. Organized Crime allegedly controlled most of the Concrete companies in the metropolitan area as well as the Construction labor unions. Salerno advised Trump to contract with S & A Concrete with regard to pouring concrete for Trump Tower at an additional 20% cost to Trump or else Trump might experience a very costly labor slowdown in the construction of his tower. Trump acquiesced — ponied up the 20% premium and Trump Tower got built without any labor slowdowns.

Fast forward to the period shortly after Trump’s inauguration when Trump was contemplating the imposition of the Muslim travel ban to the U.S. Turkey is a secular Muslim country. President Erdogan was unhappy with the impending decision and let it be known that the letters comprising TRUMP’s name on the twin Trump towers in Istanbul might be coming down. Trump and his daughter Ivanka telephoned Erdogan and it was decided that Turkey would not be included in the travel ban and the ‘TRUMP’ name remained gleaming from the twin Istanbul towers.

We can view the S & A Concrete business decision as financial coercion of Donald Trump and it would not be a stretch to attribute the omission of Turkey from the Trump travel ban as an Erdogan exploitation of a Trump business cash cow in Turkey. The above represent prime examples of the use of the ‘stick’ approach by Fat Tony and Erdogan in financially leveraging Trump.

How would the carrot approach to financial leverage work with regard to Trump?

Motive

Trump is looking at pressing financial debt to the tune of $421M much of which comes due in the next several years. Trump is currently enduring a significant cash flow problem due to the fact that Hotels and Golf courses are among the worst-hit of all Covid targeted industries. Trump needs substantial cash to pay the interest on his many loans. Refinancing will be a challenge given the close scrutiny provided the titular head of the Trump Organization known in the compliance industry as a PEP — politically exposed person.

The above apparent financial weaknesses suggest a vulnerability that might induce a foreign power with significant cash on hand to dangle dollars in a covert fashion to an economically distressed tycoon. “The picture that emerges most starkly from the mountain of figures and tax schedules prepared by Mr. Trump’s accountants, is a businessman — President in a tightening financial vice.”

Means

Should a powerful political leader of a foreign country with control over the biggest business oligarchs in his country e.g. Russia, China, or in the instant case — Turkey — wish to provide Trump with discrete cash payments disguised as loans, all he would have to do would be to make use of some shell companies controlled by favored oligarchs — linked with bank accounts located in countries with limited anti-money laundering supervision in order to facilitate wire transfers to Trump controlled shell companies with concealed foreign bank accounts.

If the above scenario sounds vaguely familiar think Paul Manafort. His indictment outlines the use of multiple offshore shell companies and foreign bank accounts used to facilitate and disguise payments from Russian and Ukrainian business/political sources that Manafort then concealed from the IRS and FinCEN by not reporting their existence and taking measures to hide them from scrutiny.

The NYT has recently reported that its inspection of Trump tax-related information has unearthed foreign bank accounts controlled by Trump in Ireland, UK, and China. Trump did not disclose the bank account in China on his requisite annual Disclosure forms and his spokesman explained that non-disclosure by claiming the account was in the name of a Trump subsidiary corporation.

For tax return analysis regarding a corporation with a multitude of subsidiary corporations to be fruitful, there need to be supplemental investigative aides e.g. other frames of reference to paint a full financial picture of the subject. Bank account analysis would be the first preference of most financial investigators, particularly when reinforced by available FinCEN database analysis to include Suspicious Activity Reports filed by financial institutions required by Anti-Money Laundering(AML) regulations to Know their Customer(KYC) in order to report irregular or suspect financial transactions. We can see that such an approach would be problematic when it comes to the Trump Organization.

It should be noted that Mr. Trump has made use of upwards of 500 Limited Liability Corporations in the past two decades. That in itself is not unusual for real estate moguls. But maintaining that many business subsidiaries certainly makes it a challenge for any government regulatory authority to do their job effectively.

It also hampers banks from conducting their due diligence in Knowing Their Customer(KYC) and fully implementing viable anti-money laundering mechanisms. This observation is supported by the fact that despite all the scrutiny that the media has provided with regard to Trump’s business dealings over the years we only just now are being informed of the existence of three foreign bank accounts controlled by Trump. How many others are there?

It is a reasonable presumption that the Chinese bank maintaining an account acknowledged by Trump while operating in government-controlled Communist China, will not file a Suspicious Activity Report(SAR) with U.S. Treasury Department FinCEN. Then there is a rebuttable presumption that Trump’s main bank — Deutsche Bank — will not likely file any SAR’s on its most well-known PEP and a guy who owes them over $300M, so as to not piss off their client and jeopardize the loan repayment. This is a reasonable characterization given the fact that the FinCEN Files note that no SARs have been filed by Deutsche Bank with regard to Trump or any of his LLC’s even though Deutsche has engaged in over half of the two Trillion dollars of suspicious global financial transactions tracked by the FinCEN Files. It is noted that Deutsche Bank did in fact file a SAR on their Russian oligarch client Oleg Deripaska — Paul Manafort’s infamous business associate — for multi-millions in suspect financial transactions. But nada on ‘the Donald,’

Given the availability of multiple foreign and domestic banks with a likely willing predisposition to facilitate payments to a Trump shell company from a shell controlled by foreign sources without filing any reports with FinCEN, all that is then needed to convey some carrots for foreign favors — are offshore shells controlled by someone close to the foreign leader. We will limit our examination of this premise to Turkish President Erdogan.

Predisposition

Halkbank is the largest state-owned and controlled bank in Turkey. Halkbank was heavily involved in circumventing sanctions applied to Iran. SDNY brought successful prosecutions against Turkish money launderers and Halkbank itself with regard to their role in aiding and abetting the evasion of the sanctions. This action brought pushback from the Turkish leaders to the point that Trump’s buddy Senator Lindsay Graham was quoted as saying that “Trump is very sensitive about Halkbank.” Trump reportedly advised Erdogan via telephone that the prosecutors in SDNY were Obama’s not his and he promised to look into the situation.

Senator Ron Wyden characterized the above revelations as “outrageous.” “In the big picture, all evidence points to President Trump interfering in a criminal investigation and Sanctions enforcement as a favor to President Erdogan.”

Why would Trump exhibit such weakness to the Turkish tyrant? And what part of that weakness can be attributed to Trump’s need for sustained cash remuneration from the Istanbul twin towers bearing his name? Or were there other inducements involved? How would that work?

Opportunity

Early on in Trump’s administration, Eric Edelman — who served George W. Bush as Under Secretary of Defense for policy and was also posted to Turkey as U.S. Ambassador to Turkey for a time, characterized the conduct of Foreign Policy by Trump — as “the replacing of formal relations among nations in several cases with family-to-family relationships or crony-to-crony relationships.” He elaborated — “Certainly Erdogan would prefer that kind of relationship as he runs a crony capitalist regime of his own.”

Not long after the initial Trump-Erdogan introduction in 2012, Erdogan’s son Bilal engaged Elena Baranoff — VP of Customer Relations of the Trump Grande in Sunny Isles, known as Trump’s “Russian Hand,” to facilitate the purchase of Manhattan real estate property valued at $25M in 2013. This was not the first crony/family contact nor would it be the last.

“My daughter loves Turkey, and she loves Istanbul, and she really always enjoyed coming here and she’s been here many times,” Mr. Trump said in the [opening of the Trump Istanbul Towers in 2012] ceremony in Istanbul. “Her great friend is Mehmet,” Mr. Trump added, referring to Mr. Yalcindag as having “done some unbelievable job.” Mehmet Yalcindag is a partner in Trump Towers Istanbul and is married to the daughter of Aydin Dogan — Trump’s main business partner in the Istanbul project and patriarch of Dogan Holdings — one of the largest business conglomerates in Turkey.

Ex-National Security Adviser John Bolton declared in a cable television interview with Stephanie Ruhle that “he believed there is a personal or business relationship dictating Trump’s position on Turkey.” Could that be Ivanka’s great friend Mehmet? Who is this guy?

Mehmet Yalcingag helped negotiate the deal in 2008 that led to the consummation of the successful Trump Tower Istanbul business deal with the Dogan family. He has reportedly met with Donald Trump personally 3–4 times a year successfully nurturing their relationship to the point that it was Mehmet that introduced Trump to Erdogan in 2012 at the opening of the Trump twin towers in Istanbul. Mehmet continued to invest time and effort into his relationship with Trump that resulted in Mehmet being the only foreigner invited to spend election night 2016 in the same hotel room as Donald Trump.

The Dogan family allowed Mehmet to repair their relationship with Erdogan in this same period of time. Dogan Media controlled companies had fallen in disfavor with Erdogan. Yalcindag was so successful in his networking efforts that he was appointed successor to Ekim Alptekin(of Michael Flynn fame & fortune) in 2018 to honcho TAIK — Turkey U.S. Business Council. This came just months before Yalcindag was appointed to the newly created Science, Technology, and Innovation Policies Foundation of Turkey which was directly associated with Erdogan’s Presidency.

This appointment was likely in recognition of Mehmet’s long interest in tech-related businesses. Yalcindag had in fact forged close links with Vladimir Putin’s Technology czar Arkady Volozh who was instrumental in the development of Russia’s most successful search engine Yandex. Mehmet was in fact appointed board Chair of Yandex’s Turkish subsidiary in 2012.

Before drilling down on another key son-in-law in the U.S. — Turkish backdoor or Son-in-Law diplomacy relationship - Berat Albayrak, we need to take a closer look at the Dogan family offshore holdings that would provide them with the potential to move and/or receive large amounts of money globally in a completely opaque fashion should they be motivated to do so.

Recall that Mehmet married Dogan’s daughter Arzuan Dogan Yalcindag who became Chairwoman of the vast Dogan Holding business conglomerate upon the retirement of the eighty-something Aydin Dogan. When one probes the International Consortium of Investigative Journalists(ICIJ) database of offshore shell companies for the name Yalcindag the result obtained is Arzuan Yalcindag and her Malta-based shell company called Falcon Enterprises Holding Limited. It gets really interesting when one then explores this link by clicking on it. Please note the ten officers associated with Falcon with particular emphasis on Arzuan Yalcindag, Aydin Dogan, and Vice-Chairwoman of Dogan Holdings — Hanzade Dogan Boyner. Clearly, there exists a family effort to conceal financial holdings and activity from official scrutiny and it is structured in a way to shield Mehmet Yalcindag.

Should one click on Aydin Dogan, the graphic connects Dogan and Falcon Enterprises established in 1997 with an Istanbul address. While this article does not relate Aydin Dogan to the state-controlled bank Halkbank it is noted that the billionaire business tycoon Dogan has invested in many different industries over the course of his long career. Dogan demonstrated his Banking chops when he bought the controlling interest in Disbank in 1994 then building it up to include retail banks located all over Turkey before selling it to Fortis Bank N.V in 2005.

Apparently, the aging business patriarch never lost his interest in Bank investments since Turkey’s Banking Regulation & Supervisory Agency(BDDK) approved an application from Dogan Holdings to establish its own Investment bank on March 18, 2018. The press release stated that the new bank will operate under the name D Investment Bank A.S. seeded with a starting capital of 200M Turkish Liras($28.5M) and the chair will be Aydin Dogan.

The BDDK comes under the supervision of the second most powerful person in Turkey — the Minister of Finance & Treasury in Turkey — Berat Albayrak. Berat married the daughter of the President of Turkey Recep Tayyip Erdogan — Esra Erdogan in July of 2004. Previous to his Finance position Albayrak, despite having zero background in politics was appointed Minister of Energy. It wasn’t long before he became embroiled in some controversy over his alleged involvement in ISIL oil shenanigans. Prior to that Albayrak assumed the position of CEO of a massive Turkish business conglomerate called Calik at the ripe old age of 29.

Calik’s Chairman Ahmet Calik is reputed to be a close associate of President Erdogan with numerous ties to foreign lenders. Indeed, Albayrak’s father is alleged to be an old-time close friend of Tayyip Erdogan, one of the so called ‘Anatolian Tigers.’ And so the Turkish crony capitalism ties and family to family business dealings story continues.

According to reports from OCCRP, Albayrak is one of three sons-in-law who is known to have coordinated contacts between President Erdogan and President Trump with Jared Kushner and the aforementioned Mehmet Yalcindag the others. Yalcindag(Ivanka’s good friend) is reported to have helped arrange White House meetings for Albayrak with Trump-Kushner-and U.S. Treasury Secretary Steve Mnuchin. In one of those meetings, the NYT reports that Albayrak successfully convinced Trump to withhold imposing sanctions over the purchase by Turkey of a sophisticated anti-aircraft missile system produced by Russia called the S-400.

This is a curious accomplishment by someone said to possess limited to no political experience but he does have some financial chops according to some other curious reports. Malta Today reports that in 2012 — the same year the Istanbul Trump Towers opened and Mehmet Yalcindag introduced Trump to Erdogan — Berat Albayrak helped set up eight offshore shell companies in Malta in a bid to avoid paying millions of dollars in taxes for his company — Calik Holding, a report in the Malta Files has shown.

Another publication called The Black Sea reported that Albayrak was involved in opening up at least four additional shell companies located in Sweden in ‘an intricate offshore structure.’ This structure facilitated Calik Holding’s tax evasion to the tune of millions of dollars.

Berat’s brother Serhat is also involved in Calik’s offshore tax evasion maneuvers as can be seen when we access the ICIJ database for the Paradise Papers for a shell company directed by Serhat Albayrak called Frocks International Trading LTD located in Malta. We can be assured this is an Albayrak connected shell due to the presence in the graphic of Calik’s Foreign Affairs Director — Safat Karasslan.

So far we have successfully outlined the use of offshore shell companies to conceal discrete financial dealings relative to tax evasion by cronies, friends, and family members close to the President of Turkey. But what about Tayyip himself?

According to a Malta Files expose in 2017 the family of Recep Tayyip Erdogan beneficially owned an offshore company called Pal Shipping nominally controlled by an Azerbaijani business mogul named Mubariz Mansimov through his Palmali Group holding company. It was through Pal Shipping and Mansimov that Erdogan became the owner of a $25M oil tanker by the name Agdash without paying nary a centime. So who is Mansimov and why should anyone care?

According to a Forbes report — Mansimov got his start after serving as an officer working in the Soviet Secret Service(he insists it wasn’t the KGB) then started buying ships for a fifth of their value during the privatization era. Mansimov obtained and sustained oil shipping contracts with Lukoil(a major Russian energy company) and SOCAR the big Azerbaijani state-run oil company. Mansimov changed his last name to Mubariz Gurbanoglu at the bidding of the Muslim President of Turkey Erdogan when Mubariz became a Turkish citizen.

Contextually, it is important for the reader to be informed that Mansimov is known to be an associate of Sezgin Baran Korkmaz owner of SBK Holding which has major investments in the Russian energy sector. A sister company to SBK Holding is SBK Holding USA run by Levon Termendzhyan — a shady Armenian character reputed to have Organized Crime ties and being investigated in the States for Tax Evasion, Money Laundering, and stolen petroleum. Korkmaz is known to be a close ally of the earlier referenced Ekim Alptekin and was looked at by the Mueller investigation.

When one queries the ICIJ database for Palmali in order to get a grip on the expanse of Mansimov’s offshore holdings one gasps at the fact that close to forty offshore shell companies are listed. In 2018 Mansimov lost most of his financial empire in Bankruptcy proceedings brought by the large Russian state-controlled Sberbank. But well before that Mansimov managed to transfer the Agdash to Erdogan through his own offshore shell companies and those controlled by Erdogan.

Included in these complex concealed transactions are Tayyrip’s son Burak, brother Mustafa Erdogan, an Isle of Man shell called Bumerz Limited, and another Isle of Man company called Bellway Limited which was the ultimate controlling party of Pal Shipping Trader One and the Agdash. Some parts of these transactions were worked through Halkbank which might explain some of the telephone calls Erdogan had no trouble putting through to the White House in pursuit of more errands for its chief inhabitant.

Conclusion

This writer establishes no direct financial link between any individual or entity associated with Donald Trump nor Recep Tayyip Erdogan other than the Istanbul Trump Towers — a not so small conflict of interest on the part of ‘the Donald.’

But we can conclude that Donald Trump maintained until recently, undisclosed foreign bank accounts that likely circumvented the attention of FinCEN. Mr. Trump is the titular head of the Trump Organization that has control of approximately 500 subsidiary shell corporations one of which maintained a concealed bank account in China from which $15M is known, thanks to the NYT, to have been withdrawn since Trump became President. Neither the source nor the disposition of these funds have been divulged nor does anyone currently know what other funds have moved through this account or any other unknown foreign bank accounts.

Recep Tayyip Erdogan has prevailed upon President Trump in numerous sensitive foreign policy issues to do him right and Mr. Trump has done so. We have outlined herein both political leaders’ knowledge, predisposition, means, manner, opportunity, and motive in the use of opaque financial activities.

We can conclude that President Erdogan has ‘leverage’ over President Trump. We can also conclude that both President’s maintain a cavalier attitude toward transparency in their private financial dealings and both have engaged in crony capitalism and family to family exploitation of personal relationships in order to gain favor.

While little can be done towards adjusting President Erdogan’s conduct, it remains to be seen if any levers in the U.S. financial, criminal justice, or political systems can be brought to bear on President Trump’s suspicious conduct of foreign policy with regard to Turkey, to say nothing of Russia or China given his overall financial weakness, obvious conflicts of interests, and his proclivity for concealment of his business affairs.

One tool that can be sharpened to combat covert financial activities through the use of anonymous shell companies would be for Congress to pass pending bipartisan legislation to require registration and identification of beneficial ownership of Limited Liability Companies. But there seems to be some political hangup in getting this legislation passed. Perhaps after the election…

We will see.

Martin J. Sheil

martinsheil@protonmail.com

Photo by Adii Wahid on Unsplash

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Martin Sheil

Retired Special Agent IRS Criminal Investigation; Federal Contractor Deloitte & DOJ OCDETF; Letters of Commendation from Directors FBI Louis Freeh & Comey