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Trump’s Conflicts of Interest in Israel

President Donald Trump arrives to deliver a speech at the Israel Museum in Jerusalem, May 23, 2017.

The Justice Department investigates dark money

One of President Donald Trump’s first forays into business in Israel came prior to his election in 2006, when Trump and the Israeli luxury condo developer Crescent Heights signed a licensing deal to build a 70-story Trump-branded tower in Ramat Gan, a town on the border of Tel Aviv. Crescent Heights purchased land for the tower for $44 million but ended up selling the land for $80 million in 2007. In 2008, Trump sued Crescent Heights for allegedly violating their agreement by selling the land, a lawsuit that he ended up losing.

In 2011, after learning that an Israeli company, H. Pixel International Trade Ltd., was selling Trump-branded vodka and using Trump’s image in advertising, Trump sued the company. The suit, which was eventually settled by H. Pixel CEO Avi Eliyahu, was based on an apparent misunderstanding: The company had received permission to make and market the vodka from an American company that held licensing rights for the vodka in the United States, although Trump claimed to have revoked the U.S. company’s license. Following the settlement, Trump and Eliyahu signed a deal for H. Pixel to make and sell Trump-branded vodka, as well as energy drinks. The potato-based vodka, which was mostly marketed for use during Passover, is reportedly no longer being manufactured, although remaining supplies can supposedly still be found on store shelves. Coincidentally, Trump has claimed that his failed vodka brand was, “one of the most successful launches ever in the history of this business,” which may or may not be the case. What is clear is that consumers and connoisseurs clearly were not impressed by the vodka, with one critic calling it “exceptionally harsh.”

In mid-2013, Trump announced plans to build a golf course in Ashkelon, Israel, which would also include a resort village, convention hall, country club, and shops. To date, however, no golf course has been built nor are there any indications that any deals were actually previously made in relation to the possible project.

But by far the most important and troubling conflicts of interest related to Israel trace back to Jared Kushner—the president’s son-in-law, a key White House adviser, and the man that Trump has charged with coming up with a Middle East peace settlement. During the campaign, Kushner arranged and sat in on Trump’s September meeting with Israeli Prime Minister Benjamin Netanyahu, a man with whom the Kushners have long-standing personal ties.

According to reporting by The New York Times, Kushner has an unsecured line of credit from Israel Discount Bank, which is worth as much as $5 million. Additionally, Israel’s largest bank, Bank Hapoalim, has given Kushner Companies at least four loans. Bank Hapoalim is currently the subject of a U.S. Department of Justice investigation into their possible role in helping wealthy Americans evade taxes through undeclared accounts. A settlement in the case could be reached as early as this year, which could be an area of serious concern if Kushner or the White House attempt to influence the inquiry in any way.

The Associated Press has also reported that Kushner Companies has a previously undisclosed real estate deal with major Israeli insurer Harel Insurance Investments and Financial Services Ltd. on a New Jersey apartment building. According to the AP, officials at Harel confirmed that both companies continue to profit from the deal through the collection of tenants’ rent payments. The Kushner Companies spokeswoman declined to comment to the AP on whether Kushner had sold his interest in the property.

Trump's Conflicts of Interest

This interactive map of the world spells out President Donald Trump’s and his family’s conflicts of interest in 25 countries around the globe.

Kushner Companies also confirmed having a “longstanding relationship” with Israeli Bank Leumi, in addition to Bank Hapoalim, although it did not elaborate on the relationship. Bank Leumi was also the subject of a Justice Department investigation for allegedly helping American customers evade U.S. taxes from 2002 through 2010. In 2014, Bank Leumi reached a settlement with the Justice Department, agreeing to pay $400 million to the U.S. government.

While Kushner resigned from more than 200 positions related to the family-run business, Kushner Companies, his recently released financial disclosure form illustrates that he will continue to benefit from the family business. Moreover, Kushner placed the assets from the financial interests from which he did divest in a trust run by relatives, which could present additional conflicts of interest. Further, there have already been numerous instances in which Kushner’s disclosures have been shown to be incomplete or incorrect.

Further, as pointed out in a New York Times article by Eric Lipton and Jesse Drucker, Kushner’s disclosure form “reveals few details about the underlying investments that make up the Kushner empire, such as the addresses of buildings, sources of financing and names of partners.” This lack of transparency makes it difficult to know where all of Kushner’s conflicts of interest may lie.

The New York Times also reported that a Kushner Companies spending spree of about $190 million on properties in New York was made possible because of major investments from a member of Israel’s Steinmetz family, “which built a fortune as one of the world’s leading diamond traders.” Kushner Companies and Steinmetz representatives maintained that Raz Steinmetz was the source of the money. Raz’s uncle is billionaire Beny Steinmetz, who, as The New York Times noted, “is under scrutiny by law enforcement authorities in four countries”—including the United States, Israel, Switzerland, and Guinea—for allegations ranging from bribing government officials to money laundering. More specifically, as The New York Times reported, the Guinean government accused Beny Steinmetz in 2014 of paying an $8 million bribe to the wife of dictator Lansana Conté for lucrative mineral rights.

The finances of Steinmetz family members have reportedly often been closely intermingled, although Raz Steinmetz’s attorney told The New York Times that Raz and Beny Steinmetz had not been in contact since 2013 and that any business relationships between them took place more than 20 years ago. The Times noted that Kushner Companies has scrubbed any mentions of its Steinmetz associations from its list of partners on its websites, although the Kushners and Raz Steinmetz apparently continue to do business together.

Follow the paper trail

According to Trump’s July 2015 financial disclosure—which was not verified by regulators and therefore may not include all of his foreign deals or assets—Trump made as much as $100,000 in royalties and owned, had ownership interest in, or was a managing member of several companies related to Trump’s beverage business in Israel, including the following:

  • Trump Drinks Israel Holdings LLC, member, president
  • Trump Drinks Israel Holdings Member Corp., president, director, chairman
  • Trump Drinks Israel LLC, member, president, received between $50,000 and $100,000 in royalties
  • Trump Drinks Israel Member Corp., president, director, chairman

According to Trump’s May 2016 financial disclosure—which also was not verified by regulators and therefore may not include all of his foreign deals or assets—Trump owned, had ownership interest in, or was a managing member of several companies related to Trump’s beverage business in Israel, including the following:

  • Trump Drinks Israel Holdings LLC, member, president
  • Trump Drinks Israel Holdings Member Corp., president, director, chairman
  • Trump Drinks Israel LLC, member, president
  • Trump Drinks Israel Member Corp., president, director, chairman

U.S.-Israeli relations are often at the center of understanding complex issues in the Middle East, where war and peace are at times in the balance. Yet now the president’s son-in-law—a diplomatic novice—is charged with leading sensitive negotiations at the same time that his family’s real estate company has benefitted, and continues to benefit, from relations with multiple Israeli individuals and banks, including some who are under ongoing Justice Department investigations for money laundering, tax evasion, and bribery. It is hard to believe that the Trump White House has America’s best interests uppermost in mind when there is this toxic mix of nepotism, ineptitude, and corruption at play.

Read the full series of columns here.

Carolyn Kenney is a policy analyst with the National Security and International Policy team at the Center for American Progress. John Norris is a senior fellow at the Center.