Tag Archives: Ivanka Trump

What Scott Pruitt’s Troubles Tell Us About Corruption in Kalorama

It’s tempting to draw parallels between the situation at 2449 Tracy Place NW, where Jared Kushner and Ivanka Trump rent a mansion owned by Chilean mining billionaire Andronico Luksic Craig, and Scott Pruitt’s sweetheart deal to rent a bedroom in a Washington DC condo owned by the wife of powerful lobbyist Steven Hart, chairman of Williams & Jensen, for fifty dollars a night. But that will not get us very far, and it’s best not to conflate the two cases.

To begin with, Jared and Ivanka are reportedly paying market rate for their place: $15,000 / month. While no one, to my knowledge, has seen records of those monthly payments in the form of cancelled checks or electronic transfer receipts, it seems pretty safe to assume that rent is actually being collected. Doesn’t it? The corporation that owns the property, Tracy DC Real Estate, Inc., was formed by Luksic’s lawyers at Duane Morris LLP in Boston, and the deal was put together by one of the Washington DC’s “top-producing” real estate agents: Cynthia Howar, who is herself a member of the bar. The lawyers, one would like to think, took care of the details.

Not so in Scott Pruitt’s case. Despite the friendly terms, Pruitt fell behind on his rental payments, according to Politico, “forcing his lobbyist landlord to pester him for payment.” Pruitt’s landlord, Vicki Hart, did not have the appropriate business license to rent out a room in her Washington, DC condo, and now faces fines of up to $2000.

In Kalorama, Tracy DC Real Estate, Inc. had obtained the business license for a one family rental from the Department of Consumer and Regulatory Affairs in the District of Columbia by March of 2017. That license is good for two years, until February 28, 2019. Who can say where the first family tenants will be by then?

Of course, there is one important parallel to draw between the Pruitt case and the situation at Tracy Place. It doesn’t have to do with licenses or rental agreements or payments. It has to do with ethics — or an apparent lack of concern with ethics.

Scott Pruitt rushed an ethics review of his bedroom rental only after news stories about the deal started to appear. The review was botched, or its conclusions were forced; it’s unclear which. The EPA’s top ethics official now says he needs to revisit the matter, because he was not in full possession of the facts when he retroactively approved the arrangement. This only serves to highlight that the right time for Scott Pruitt to ask whether the rental was permissible or appropriate was before entering into it.

Much the same could be said of Jared and Ivanka’s rental of the Kalorama mansion: the lawyers may have left nothing undone, but there is still the question whether this rental agreement ought to have been struck in the first place, given the fact that the mansion’s owner — or the mining conglomerate his family controls — was suing the U.S. government over the renewal of mining leases.

Twin Metals Minnesota had already sued the United States government back in September of 2016 over lack of action on the Superior National Forest leases. When the Obama administration did act in December of 2016, denying renewal of the leases, and launching a study of a 20-year ban on sulfide mining near the Boundary Waters, it was clear Twin Metals would sue again.

This second suit was filed by Antofagasta’s subsidiaries, Twin Metals Minnesota and Franconia Minerals, on February 21, 2017, just about a week before Tracy DC Real Estate obtained its license to rent the Kalorama mansion as a one family unit. A review of the rental agreement should obviously have been undertaken by the Office of the White House Counsel, with these and other facts in view, if only to preempt scandal-mongering and dispel any appearance of impropriety.

One of the earliest reports of the rental agreement in the Wall Street Journal quotes Rob Walker, a lawyer in private practice who specializes in election law and government ethics, to the effect that “there might not be an ethics problem” as long as the mansion is being rented at fair market value. Maybe not. But I’ve been unable to find any indication that a formal ethics review of the Kalorama rental agreement was ever requested or conducted.

From Caval to Kalorama

Kalorama

The Washington, D.C. mansion rented by Jared Kushner and Ivanka Trump.

We know this much. In December of 2016, just after the election, Chilean billionaire Andronico Luksic Craig bought the Kalorama Triangle mansion that Jared Kushner and Ivanka Trump now rent in Washington, D.C.. Just about six months later*, records show, the Department of Interior began drafting the December 22nd, 2017 memo that would reverse Obama-era protections for the Boundary Waters and renew the lease of lands in Superior National Forest held by Twin Metals, a wholly owned subsidiary of Antofagasta Plc, the mining conglomerate controlled by the Luksic family. Headlines have hinted at corrupt dealings, as I’ve noted in previous posts, but no hard evidence has come to light.

Maybe it’s all just a happy coincidence of the kind that frequently befalls the world of billionaires, mansions, and yachts. In any case, Andronico Luksic Craig, Jared and Ivanka’s landlord, is clearly a master of such coincidences. Journalist Horacio Brum dubs him “el gran titiritero de Chile,” the great puppetmaster of Chile. He is “a man who does not need to do politics,” writes Brum, “because he makes politicians.” The role Andronico Luksic Craig played in the scandal known in Chile as “el Caso Caval” — The Caval Affair — is illustrative.

The Caval Affair involved a $10 million loan for a shady real estate scheme undertaken in late 2013 by Natalia Compagnon, the daughter-in-law of Chile’s president, Michelle Bachelet, and 50 percent owner of a company called Sociedad Exportadora y de Gestión Caval Limitada. El Caso Caval was a drawn out and complicated affair, and charges of corruption and influence peddling would dog Compagnon and the Bachelet family for years. Just one feature of the scandal needs to concern us at the moment, and that’s the timing of the loan itself.

In the months immediately preceding Bachelet’s election, Compagnon had been trying to secure a line of credit for her company to purchase three plots of land in Machalí, in the O’Higgins Region in central Chile. Compagnon and her husband, Sebastian Davalos Michelet, met with the Vice President of Banco de Chile to discuss the project on November 6th, 2013. This was about ten days before the elections, which were scheduled for November 17th. The loan was approved on December 16th, 2013, just a month after Michelle Bachelet was elected to the presidency. The Vice President of the Banco de Chile who made these timely financial arrangements for the daughter-in-law of the new president elect was none other than Andronico Luksic Craig.

This time-lapse illustration produced for the news organization 24 Horas lays out the whole scandal in less than three minutes. Even if your Spanish is rusty, you can follow the story. Luksic first appears around 1:26.

The pattern looks familiar. When questioned about the loan, Luksic Craig at first denied meeting the young couple more than once. (This is classic Luksic, who claims never to have met his first family tenants, and only to have said hello to Trump himself once, at a Patriots’ football game in 2012.) Only later did he admit to various meetings and contacts between him and Compagnon, including one the day after Bachelet won the election. As the scandal grew, Andronico Luksic Craig managed to retreat back into the shadows and to keep himself and the Luksic family out of the headlines.

So far, the almost daily revelations of Jared Kushner’s far-flung attempts to bail out his family’s foundering real estate empire have not turned up anything that connects Kushner’s business troubles to Chile’s Grupo Luksic or the Luksic family. But it would not be terribly surprising to learn that there is more to the Kushner story and that Kalorama mansion than Luksic Craig claims. The president’s son-in-law is a quo looking for a quid, and when it comes to making that sort of delicate arrangement, Andronico Luksic Craig appears to be a real pro.

*Since writing this post, I have reviewed documents obtained through FOIA request that show the Department of the Interior working on the reversal of Obama administration protections for the Boundary Waters as early as February, 2017, just weeks after the inauguration.