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Potential Conflicts Around the Globe for Trump, the Businessman President

INDIA

Potential Pitfalls in Dual Roles

On the other side of the world, Donald Trump Jr. had other projects he was pushing.

In 2012, he flew into Mumbai for a brief meeting with the state’s chief minister at that time, hoping to salvage a residential tower representing the Trump Organization’s first planned project there. He was hoping the chief minister, Prithviraj Chavan, would intervene on his behalf to get the permission needed.

The participants recall the meeting differently: Mr. Trump’s partner, Harresh Mehta of Rohan Lifescapes, said development regulations had changed, leaving the project in limbo, and they hoped Mr. Chavan could formalize a policy so that the project could continue. Mr. Chavan said that in a 30-minute meeting, Mr. Trump and his partner were “requesting a concession that could not be given.”

By the end of the meeting, in any case, it was fairly clear that the younger Mr. Trump’s presence had not worked any magic. The project was shelved soon after.

“He thought the name was so big, we would bend backwards to satisfy him, but that was not the case,” Mr. Chavan said.

Kalpesh Mehta, managing partner of Tribeca Developers of Mumbai, the Trump Organization’s development partner in India, confirmed that Donald Trump Jr. had met with the chief minister, but disputed the claim by Mr. Chavan that he had sought a special favor.

“The notion that a request was made by Donald Jr. to waive any regulations is absolutely false,” Mr. Mehta said in the statement, which was issued Friday. “The Trump Organization does not get involved in the regulatory aspects and/or interacting with government officials related to its projects in India.”

This example, analysts here say, points to a potentially serious ethical hazard for a United States president who is also a real estate mogul in India, with five projects underway. Mr. Trump was operating much like other developers in India, who cozy up to politicians — officially or unofficially — to push projects through the bureaucracy.

Often, they must obtain as many as 60 permissions and building permits from government officials, including bureaucrats “whose main goal in life is to attract rent,” said Saurabh Mukherjea, the chief executive of institutional equities at Ambit Capital, a leading investment bank in India.

One of Mr. Trump’s projects, Trump Towers Pune, is in fact under investigation by local authorities after another builder alleged that one of its permits was fraudulent. Panchshil Realty has disputed that accusation, saying the permit in question was not required for the construction. The very nature of the country’s real estate business, however, underscores larger concerns about potential damage to American efforts to discourage corruption in business abroad.

In India, real estate is the main vehicle politicians and businessmen have used to invest so-called black money, on which taxes have not been paid. In cities, where land is scarce and extraordinarily valuable, special favors from top political leaders can lead to windfall profits, and negotiations between developers and officials are informal affairs.

It is so routine for developers to pay bribes at every step of the approval process that many bureaucrats have informal rate sheets showing exactly how much must be paid to each official.

Politicians not only pressure the bureaucracy to approve their pet projects, sometimes even when they are against local regulations, they also squeeze government banks to give out favorable loans.

Top officials might “think in some way the U.S. president will help them,” and “can put in a friendly word with the banks” to extend loans for around 8 percent interest, rather than the characteristic 15 percent, said Vikas S. Kasliwal, the chief executive officer and vice chairman of Shree Ram Urban Infrastructure.

“If the son goes himself, if the son is willing to go and meet the prime minister of India, or the urban development minister, that is a very big thing,” he said. “They will think the president is meeting them.”

Photo

Donald J. Trump’s real estate partners from India met with him in New York on Nov. 15 as the presidential transition was underway.

Another pitfall is that Donald Trump’s partners in major projects are, in some cases, politicians themselves. Most major Indian developers have some sort of alignment, direct or indirect, with regional political leaders, who can assist in acquiring the necessary permits.

Mr. Trump’s first projects in India, which are expected to increase in number over the next year, follow this pattern: His partner for Trump Towers Pune is Panchshil Realty, owned by a family that has a close and longstanding family relationship with one of the state’s most powerful politicians, Sharad Pawar, the head of the small but influential Nationalist Congress Party. (Mr. Trump was photographed — in an image distributed on Twitter but since taken down — with executives from Panchshil Realty on Nov. 15.) Mr. Pawar’s daughter, Supriya Sule, a member of Parliament, holds a 2 percent share in Panchshil’s parent company, she said in an interview.

Mr. Trump’s partner in the Trump Tower Mumbai is the Lodha Group, founded by Mangal Prabhat Lodha, vice president of the Bharatiya Janata Party — currently the governing party in Parliament — in Maharashtra State. The Lodha Group has already negotiated with the United States government; it announced a landmark purchase of a property, known as the Washington House, on tony Altamount Road, from the American government for 3.75 billion rupees, almost $ 70 million.

His partner in an office complex in Gurgaon, near New Delhi, is IREO, whose managing director, Lalit Goyal, is the brother-in-law of a Bharatiya Janata member of Parliament, Sudhanshu Mittal. Mr. Mittal, in an interview, has denied having any connection with the real estate company.

Suraj Hegde, the secretary of the All India Congress Committee, a national body of Indian National Congress party members, said he was troubled by the dual roles Mr. Trump and his family would play in Indian affairs — particularly given real estate’s important role in India’s fast-growing economy, and the clout the United States has on the world stage.

“Basically this is the globalization of lobbying across countries, which then tries to establish monopoly over real estate,” Mr. Hegde said in an interview. He added that he was already calling for an independent parliamentary investigation of such maneuvers, including Mr. Trump’s real estate ventures in India.

“Establishing monopoly at the cost of small players by business connections to Mr. Trump is very worrisome,” he said. “This is not at all healthy for a democracy.”

Source: NYT > World

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