Trump’s Indonesia projects, still moving ahead, create potential conflicts
JAKARTA, Indonesia — One resort, planned as the largest in Bali, will overlook a spectacular Hindu temple. The other, in the verdant hills of West Java, will adjoin a theme park. The properties will be so luxurious, the Trump Organization says, that even an impressive five-star rating will not do them justice. So it will give them six stars instead.
Even as President-elect Donald Trump promises to end foreign business deals that could pose conflicts of interest — there will be “no new deals” while he is in office, he has said — his company is moving ahead with two Indonesian projects that illustrate how tricky that pledge might be.
None of the construction work to build or renovate structures at the Indonesian resorts has even begun, but Trump has forged relationships with powerful political figures in Indonesia, where such connections are crucial to pushing through big projects.
That tangle of relationships includes an Indonesian business partner who aspires to high office; a powerful politician accused of trying to extort billions of dollars from a US mining company; and Trump’s new adviser on regulatory issues, Carl C. Icahn, a top shareholder in the mining company.
The resort projects, which a Trump spokeswoman said last week were “binding contracts,” have created a gray area of conflicting interests that could be hard to separate from an array of issues facing the United States and Indonesia, including trade and contested claims over the South China Sea.
Trump’s local partner on the resorts, Hary Tanoesoedibjo, is a billionaire media mogul with his own political ambitions. He ran for vice president of Indonesia in 2014 and is organizing a political party for another possible run at national office in 2019. If Hary or his party wins a major role in government, the potential conflicts could escalate significantly.
“You could have two world leaders that are business partners,” said Richard W. Painter, who served as a White House ethics lawyer during the George W. Bush administration. “It makes it almost impossible to conduct diplomacy in an evenhanded manner. That does not work.”
Through the partnership with Hary, Trump has gained access to some of Indonesia’s top political figures, including Setya Novanto, speaker of the House of Representatives, who was temporarily forced to surrender his leadership post because of corruption allegations in 2015. Setya was heard on an audio recording seeking a $4 billion payment from the US mining giant Freeport-McMoRan.
Months before the recording came out in December 2015, Trump met with Setya during the presidential campaign at Trump Tower. After their lunch, Trump pulled Setya before the cameras at a news conference and called him “a great man,” adding, “We will do great things for the United States.”
The knot of potential conflicts includes Icahn, the billionaire investor who will serve as a special adviser to Trump. He is one of the largest shareholders in Freeport, which does so much business in Indonesia that it is the country’s largest taxpayer and has been seeking to extend its mining contract with the Indonesian government.
“This stuff is so murky,” said Karen Hobert Flynn, president of Common Cause, a nonprofit group that has called for Trump to sell off his businesses to avert conflicts of interest. “It is not going to be clean moving forward. There are going to be complications as these projects move forward.”
Trump has provided little clarity about what he means by “no new deals,” a vow made in a Twitter post he sent out in mid-December. His aides suggested in interviews last week that even if construction had not started on a project, the Trump Organization would move ahead if it had a binding agreement.
For Trump, the Indonesian deals are licensing and management agreements in which he provides the use of his name and his company manages the resorts.
Even though no structures were built, Trump secured a considerable payout on the two deals, according to a financial disclosure report that listed payments ranging from $1 million to $5 million for each of the projects between January 2015 through May 2016. That is far more than the $400,000 salary paid to the president, which Trump has said he will decline.
Trump created the corporations that manage these projects — including DT Bali Hotel Manager and DT Lido Hotel Manager — in late June 2015, just a week after he declared his intention to run for president.
His companies have operations in at least 20 countries, including the Philippines, India, Turkey, and Britain, but the full extent of his foreign financial ties is unclear because he has refused to release his tax returns or disclose the identity of his lenders.
In addition to the no-new-deals pledge, Trump has said his sons, Eric and Donald Jr., along with other executives, will manage the family’s global real estate business.
The Trump Organization has recently moved to resolve potential controversies, in part by closing family foundations. It has also dropped a number of its proposed projects.
But other projects — including some on which construction has not started or is not well underway — are moving ahead, the Trump Organization confirmed.
Amanda Miller, the Trump Organization spokeswoman, said of the two Indonesian projects, “Construction is well underway and will proceed as planned.”
In fact, construction has started only on a golf course and toll road as part of the Lido Lakes resort in West Java. Separating the enterprise from politics might also be difficult because Hary’s MNC Group is building the road to the site as part of a government highway project.
On Wednesday, Trump accused the news media of exaggerating any potential conflicts presented by his business holdings.
“It’s not a big deal; you people are making it a big deal, the business,” Trump said on the steps of his Mar-a-Lago resort in Florida, where he was spending the holidays. “They all knew I had big business all over the place.”