www.motherjones.com/politics/2020/11/we-asked-finance-experts-to-explain-trumps-odd-business-methods-in-scotland-they-were-mystified/?utm_source=twitter&utm_campaign=naytev&utm_medium=social
We Asked Finance Experts to Explain Trump’s Odd Business Methods in Scotland. They Were Mystified.
“You don’t have to sniff the air very long to see there’s something that smells.”
The clubs—one at Turnberry, located outside Glasgow, and one in Aberdeenshire, situated on a remote stretch of coastline along the North Sea—have been a main focus of the Trump Organization over the past decade. Trump has poured more money into these properties than any other part of his business. Yet neither club has ever turned a profit. In fact, together they have lost as much as $6.2 million annually over the past 14 years. Trump has other failed investments, but he rarely sticks with a losing venture for so long.
That’s not the only strange thing. Instead of putting money into the business, in exchange for equity, the way an investment usually works, Trump has been lending himself the cash needed to develop the properties and keep them afloat. And he has dramatically overvalued the courses—and not just in his typical braggadocios way, but in detailed corporate filings made annually in the UK.
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But tax and financial experts Mother Jones consulted about his Scottish ventures were puzzled by his business methods, which they said did not have obvious tax or financial advantages. Perhaps, they said, Trump is just bad at doing business.
However, some critics have speculated about a more nefarious explanation for Trump’s anomalous business dealings related to the Scottish golf courses: money laundering. To that end, members of Scottish parliament have been pushing to probe Trump’s golf clubs using a statute typically aimed at kleptocrats.
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Moreover, the way he has funneled money into the Scottish courses is downright bizarre. Every dime that he has put into the properties has been lent to the Scottish companies he owns that control the golf courses, by Trump himself or one of his New York-based LLCs.
Tax experts say it’s not unusual for different parts of a business based in different countries to lend to each other. Doing so can create tax advantages since the borrower may be able to write off the interest payments. Yet Trump’s loans (from himself and his LLCs to his Scottish companies) carry no interest and have no due dates, negating the most common tax benefit.
“I don’t see the tax angle to doing that,” says Daniel Shaviro, a professor of tax law at New York University’s law school. “There is a stupidity angle, perhaps, which would fit what we know about him as a businessman more generally.”
Shaviro and several other tax experts speculated that Trump may be attempting to take advantage of a variety of other, more obscure tax-avoidance tactics, but they pointed out that these strategies were, for the most part, not legally advisable, if not outright illegal.
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Earlier this year, members of the Scottish parliament began urging their government to pry open Trump’s books and use what’s known as an Unexplained Wealth Order (UWO). As the name suggests, it’s a UK statute that can be used to compel a politically prominent person to explain how he or she pulled off a financial transaction that appears out of line with what’s publicly known about his or her finances. In 2018, this law was used to examine how the wife of a jailed ex–Azerbaijani government official had managed to afford a £16 million shopping spree at Harrods.
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Fueling the suspicions of his critics is the fact that Trump has a history of partnering with people with alleged ties to money laundering. One example is the Agalarovs, the Azeri-Russian family who Trump teamed up with to produce the Miss World pageant in Moscow and with whom he explored developing a Moscow tower. The Senate Intelligence Committee reported this summer that the Agalarovs “have significant ties to Russian organized crime and have been closely affiliated with individuals involved in murder, prostitution, weapons trafficking, kidnapping, extortion, narcotics trafficking, money laundering and other significant criminal enterprises.” The committee also noted that Trump’s partners in the Trump Soho hotel project had connections to money laundering.
Btw, to get a residency or work visa to the uk questions about unexplained wealth are potentially problematic...