Did Donald Trump’s Executives Violate the Cuban Embargo?

Did Donald Trump's Executives Violate the Cuban Embargo?
Golfing with the enemy.
By Jesse Drucker and Stephen Wicary | July 28, 2016

Cuba has only one 18-hole golf course: the government-run Varadero Golf
Club, about two hours east of Havana. Built on the 1930s estate of
chemicals magnate Irénée du Pont, it was refurbished in the 1990s when
the government turned to tourism to bolster its economy after the fall
of the Soviet Union. Du Pont's former residence, Xanadú Mansion, serves
as the clubhouse. On the third floor, a wood-and-marble bar offers
sweeping views of the Florida Straits.

The course, expanded by Canadian architect Les Furber, is largely flat
and littered with palm trees, and the greens fee runs $70. One reviewer
described it as "inoffensive golf at its finest." Yet lining up a putt
on the 8th or 18th holes, both of which are right on the azure water,
even a duffer can't miss Cuba's potential. With fertile soil, plentiful
green coastline, and topography that spans plains, rolling hills, and
rugged mountains, the island is a golf course architect's Shangri-La.

On an afternoon late last year, the golfers teeing off included a group
of U.S. executives from the Trump Organization, who have the enviable
job of flying around the world to identify golf-related opportunities.
The company operates 18 courses in four countries, including Scotland
and the United Arab Emirates. It would like to add Cuba. Asked on CNN in
March if he'd be interested in opening a hotel there, Donald Trump said
yes: "I would, I would—at the right time, when we're allowed to do it.
Right now, we're not." On July 26 he told Miami's CBS affiliate,
WFOR-TV, that "Cuba would be a good opportunity [but] I think the timing
is not right."

That, however, hasn't stopped some of his closest aides from traveling
to Cuba for years and scouting potential sites and investments. The U.S.
trade embargo, first established in 1962, prohibits U.S. citizens from
traveling to the island. But over the years, the U.S. has carved out
allowances for family visits, journalism, and other social causes. Most
commercial activity is still forbidden, though, with a few exceptions,
such as selling medical supplies or food. Golf isn't on that list.

Trump Organization executives and advisers traveled to Havana in late
2012 or early 2013, according to two people familiar with the
discussions that took place in Cuba and who spoke on condition of
anonymity. Among the company's more important visitors to Cuba have been
Larry Glick, Trump's executive vice president for strategic development,
who oversees golf, and Edward Russo, Trump's environmental consultant
for golf. On later trips, they were joined by Jason Greenblatt, the
Trump Organization's chief legal officer, and Ron Lieberman, another
Trump golf executive. Glick, Greenblatt, and Lieberman didn't respond to
requests for interviews. Melissa Nathan, a spokeswoman for the Trump
Organization, declined to answer a list of detailed questions.

In a series of telephone interviews, Russo confirmed he's traveled to
Cuba about a dozen times since 2011. Although he's spearheading the
company's Cuban golf efforts, according to three people familiar with
his role, Russo says these trips haven't been on behalf of the Trump
Organization. He says he's taken at least one with Glick to go
bird-watching and "check out some habitats"—activities that could
conceivably qualify for exemptions to the travel ban.

Despite saying his trips with Trump executives were unrelated to the
Trump Organization, Russo referred questions about those trips to Eric
Trump, the 32-year-old son of the Republican presidential nominee and
the company's executive vice president for development and acquisitions,
including golf. "In the last 12 months, many major competitors have
sought opportunities in Cuba," Trump said in an e-mailed statement.
"While we are not sure whether Cuba represents an opportunity for us, it
is important for us to understand the dynamics of the markets that our
competitors are exploring."

So which was it: a little birding? Keeping an eye on the competition?
Maybe neither. According to Antonio Zamora, a well-known Cuban-American
lawyer, who says he's advised the Trump Organization on Cuba for about a
decade, he and Russo visited a prospective golf site east of Havana in
an area called Bello Monte several years ago.

Based in Miami, Zamora took part in the 1961 Bay of Pigs invasion but is
now an outspoken critic of the U.S. sanctions. "An embargo that has been
in place by a world power like the United States for 50 years and has
not accomplished anything substantial is a disgrace," Zamora writes in
his 2013 book, What I Learned About Cuba By Going To Cuba. "This is not
what great powers do." He advises U.S. investors throughout Latin
America. He's circulated conceptual drawings of a Trump tower in Havana
beside refurbished versions of the Hotel Neptuno-Triton, a dilapidated
pair of 1970s buildings in the city's business district, according to a
person who saw them. (Zamora denies this.)

Zamora does say that he discussed with the Trump Organization the
possibility of teaming up with a foreign company to give Trump a
minority position in a venture. He says the deal failed to materialize.
Zamora dismisses any legal concerns about this, saying he's been to Cuba
dozens of times for conferences, and that the U.S. Department of the
Treasury doesn't bother with these kinds of trips. "It's a nonissue," he
says.

Farhad Alavi, managing partner of Akrivis Law Group in Washington and an
adviser to companies on U.S. sanctions, says that, before 2015,
exploring most potential deals in Cuba was "not even in the realm of
what Treasury might have licensed." He adds that "prior to 2015, a
fact-finding trip by a U.S. person for a business activity, like
building a golf course or hotel, was prohibited. It's not under one of
the categories of permissible travel to Cuba."

In January 2015, the Treasury Department broadened an exception for
"professional research." That's viewed by attorneys to encompass all
sorts of potential investment activity—short of signing deals. To
finalize an investment in Cuba requires a specific license from
Treasury's Office of Foreign Assets Control (OFAC). Starwood Hotels &
Resorts and Marriott each announced in March they'd received
authorization. (A Treasury spokeswoman says it is agency policy not to
confirm or deny whether specific licenses have been issued.) Russo says
the Trump Organization hasn't secured one.

"Professional research" makes it easier for companies to explore
business opportunities in Cuba, but it may not put the Trump
Organization in the clear. Golf could be seen as promoting tourism,
which remains illegal for U.S. companies. (President Barack Obama can't
change that—the tourism ban cannot be repealed without an act of
Congress.) "If the Treasury Department believed that a new golf course
in Cuba were intended to attract tourists from outside Cuba, then U.S.
persons who meet in Cuba to develop the golf course could be charged
with promoting tourism in Cuba," says Richard Matheny, chair of the
national security and foreign trade regulation practice group at Goodwin
Procter in Washington. "This is unlawful under the current sanctions."

"You can't help but say, 'Wow, here's a hotel that could be renovated'
Golf's history in Cuba is tinged with the absurd. In the 1950s the
country staged tournaments that weren't on the official PGA Tour but
still attracted top players. In 1958 famed mobster Meyer Lansky—who'd
been deported from the U.S. a decade earlier and was running a number of
successful casinos in Cuba—set out to build the greatest hotel Havana
had ever seen and further showcase the sport. With backing from Frank
Sinatra, his Monte Carlo de La Habana was to feature a casino, a
helicopter landing pad, and several glorious courses.

Lansky's timing was spectacularly bad. A few weeks after construction
started, Fidel Castro began his final rebel offensive against Cuba's
president, General Fulgencio Batista. On New Year's Eve, Batista fled to
the Dominican Republic. Castro rolled into Havana a few days later, and
Lansky soon halted work. Castro declared golf "a game of the idle rich
and exploiters of the people" and plowed over almost all the island's
courses. Even so, a series of early 1960s photographs shows Castro and
his fellow revolutionary Che Guevara hamming it up with golf clubs.
Castro was a baseball player, but Che took up golf as a young man and
was rumored to have a 4 handicap. Last year a Cuban composer and an
American librettist staged an opera in Havana based in part on those photos.

These days, Cuban officials actively promote golf development. A
200-page brochure published by the government late last year, Portfolio
of Opportunities for Foreign Investment, features three hoped-for golf
developments around the island, including two under contract with
British and Chinese developers. The government also reportedly has a
deal with Spanish airline Air Europa to develop a hotel and golf course
at Playa El Salado, about 25 miles west of Havana. The Trump
Organization has a particular interest in that development, according to
a source familiar with the matter.

Although it's not clear if Donald Trump is aware of his aides'
activities in Cuba—he didn't return phone calls for this article—he's
demonstrated a familiarity with the rules for investing there. In his
March interview with CNN, he said he wouldn't enter Cuba "on the basis
that you get a 49 percent interest, because right now you get a 49
percent interest." The exchange was an apparent reference to Cuban law
limiting foreign investors' stakes in Cuban operations to less than
50 percent. Trump didn't mention the more onerous U.S. regulations
limiting investment in Cuba. He said he likely favored Obama's efforts
to normalize relations with Cuba, "but I'd want much better deals than
what we're making."

Encouraged by the White House's loosening of regulations, plenty of
other U.S. companies, including Airbnb, Google, PayPal, and Western
Union, are gradually entering Cuba, but they must still carefully
navigate the embargo. In late June, Starwood began managing a
refurbished hotel in Havana's main business district, the first
U.S.-managed hotel in Cuba in 60 years. At a June event in Manhattan, a
Starwood executive repeatedly referred to the "business travelers" who
would be attracted by the property, apparently mindful of the perils of
promoting tourism.

The repercussions of breaking the embargo are real. Violators are still
being penalized, even for ventures only remotely connected to Cuba. In
February, the Treasury Department alleged that two Cayman Islands
subsidiaries of the energy-services company Halliburton had been
involved in oil drilling off the shore of Angola, as part of a
consortium in which the Cuban government held a 5 percent stake.
Halliburton agreed to pay the U.S. $304,706 to settle the matter.

For the Trump Organization, there's a further concern: the potential
conflicts of interest posed by Trump's far-flung business empire should
he be elected president. In addition to his operations in the U.S.,
Trump operates in Azerbaijan, Brazil, Georgia, Israel, Turkey, and
several other countries. Federal conflict-of-interest laws do little to
prevent presidents from continuing to exert influence over their
businesses—even as they exercise powers that could broadly benefit those
interests.

"Make sure that whatever you do is absolutely legal in every way, and at
some point, when it's legal, I'd be interested in it"

Russo, 70, lives in Key West, Fla. He first encountered the Trump
Organization in 2002. The former chairman of the town planning board in
Bedminster, N.J., Russo helped Trump get authorization for his golf
course there. Though he has no formal environmental training, he appears
before local regulators around the country seeking approval for Trump
projects.

On the phone, he's friendly, a talker, but the first to admit his
memory's not the best. "I don't remember last night," he says. He was
unsure how many times he and Glick, Trump's golf chief, had traveled to
Cuba. He says he took Glick on at least one trip to Cuba for some
bird-watching.

"He was into it. And that's the thing. I'm going to Cuba, I'm bringing
people to Cuba. And I know people from Trump, I know people outside of
Trump. So if somebody from Trump wanted to come with me, I don't think
that means they were representing anything having to do with the Trump
Organization. They just enjoyed the environment, like you or I would."
Russo says that on his travels in Cuba, "you can't help but say, 'Wow,
here's a hotel that could be renovated,' or, 'This is a particular spot
that would be perfect for this or perfect for that,' and I would only
hope that someday that the Trump Organization or other investors could
develop something nice over there."

Asked if he's discussed Cuban opportunities with Donald Trump, Russo
says: "I don't remember exactly what our conversations were. But you
would have to realize that talking to Donald Trump is, you know, it's a
very complicated experience." He added later that Trump admonished him
on Cuba to "make sure that whatever you do is absolutely legal in every
way, and at some point, when it's legal, I'd be interested in it."

Glick, 49, is close to the Trump family and has worked for Trump for
nine years. He recently traveled with Eric Trump, checking the status of
the company's developments in Bali, Dubai, Manila, and Aberdeen,
Scotland, according to pictures posted by the two men on their Twitter
accounts. He sits on the board of Eric's foundation. Although he has no
formal campaign role, he's a fierce advocate for Trump's White House
run, excoriating Hillary Clinton on social media almost daily. He
accompanied both adult Trump sons at the Republican National Convention
during TV interviews. One person recalled a conversation with Glick
after he returned from Cuba during which he described the company's
ambitions for golf on the island. Glick didn't respond to requests for
comment.

For his part, Russo gets that even now, pursuing golf in Cuba is
problematic. "I would interpret golf as tourism, and therefore it can't
be done at this time," he says. He maintains his dozen or so trips have
all been environmental—and for birding—with only the most casual
inquiries into golf-related properties. "Given the nature of the
regulations and OFAC's licensing trends, I would be quite surprised if
it authorized multiple trips to Cuba for nonspecialist, nonexpert,
random bird-watching," says Alavi, the U.S. sanctions adviser.

In February 2013, Zamora, the Cuban-American lawyer, set up a nonprofit
in Miami called the Florida-Cuba Environmental Coalition. Its directors
include Russo and several advisers for investors in Cuba, including some
who have consulted for the Trump Organization. Certain "environmental"
projects qualified as one of the reasons U.S. citizens could travel to
Cuba legally in 2013. When he's asked about the nonprofit, Russo's
memory falters again. "I don't think I've ever been to a meeting. I
didn't even know my name was on that group," he says.

Another board member of the coalition, Dominic Soave, is a Havana-based
business consultant from Canada who's made introductions for Trump
executives in Cuba, according to two people familiar with the matter.
He's also circulated a set of drawings of Havana with a Trump tower. "I
really haven't been advising anyone," says Soave. He, Zamora, and two
other directors say their nonprofit has taught sustainable fishing
techniques to Cuban fishermen. The group has also promoted the Ernest
Hemingway International Billfishing Tournament in Cuba, helping
Americans get licenses to take part.

A second nonprofit, the American-Cuban Golf Association, was set up last
year by Russo's wife, Jennifer Hulse, and lists a residence in Key West
as its address. The group lists her and her husband as directors. The
organization's third director is David Schutzenhofer, who runs the Trump
National Golf Club in Bedminster. Schutzenhofer did not return calls
prior to publication.

Asked about the golf nonprofit, Russo first seems confused: "What is
that supposed to do?" he asks. "Am I listed on that also?" He eventually
explains that the group was intended to provide cross-cultural golf
instruction: Cubans teaching golf to Americans and vice versa. "You
should know that the organization was my idea and had nothing to do with
the Trump Organization," Hulse wrote in an e-mail. "One of my passions
in life is golf, and I would like to find a way to bridge the distance
between our countries through love of the game."

A couple of Hulse's cultural exchanges may have taken place toward the
end of last year. Photographs and a video posted to Hulse's Facebook
page in December show her husband and Greenblatt, the Trump chief legal
officer, at the Floridita restaurant in Old Havana, a favorite of
Hemingway's. Another set of pictures, posted a month earlier, shows
Russo, Glick, Lieberman, and Soave listening to a live performance of
Hotel California in the lobby of the Parque Central hotel in Old Havana.

Still another series finds the men playing at the Varadero course. One
shot shows Russo teeing off, with Glick and Lieberman waiting their
turn. Below the pictures of the Trump executives golfing, one Facebook
friend asked: "How is the golf course?"

Hulse replied: "Not spectacular but it's the only one in Cuba right now.
Plans to build many more in the near future."

Source: Did Donald Trump's Executives Violate the Cuban Embargo? -
http://www.bloomberg.com/features/2016-donald-trump-golf-cuba/