A Brazilian prosecutor investigating possible corruption surrounding the redevelopment of Rio de Janeiro’s port district has said Donald Trump’s property company may have benefitted "in a suspicious way" from the ambitious scheme’s financial structuring.
Public prosecutor Alselmo Lopes said in a court filing made public on 27 October that he is investigating the unusual financing of Porto Maravilha, a massive gentrification of Rio’s run-down neighbourhoods surrounding the old port, which was launched by the city after it won its bid to host this year’s Olympics.
The city raised cash for infrastructure improvements in the district by putting up for auction units of development entitlement, but when developers didn’t rush in to buy, the state bank, Caixa Econômica Federal, bought them all up for eight billion reais (R$8bn) – nearly US$5bn when the deal was done in 2011 – on behalf of a workers’ pension fund.
To repay the pension fund the Caixa was to sell the development rights on to developers.
In December 2012 the Trump Organization announced that five triple-A, 38-storey towers bearing the Trump brand would be built in Porto Maravilha. Work was to have begun in 2013, but ground has yet to be broken.
In his court filing Lopes said the structuring of the Porto Maravilha deal "favoured, in a suspicious way, the Trump Organization economic group", among others, Reuters reports.
The prosecutor did not specify how, but his spokeswoman, Dionne Tiago, told Reuters that Lopes would reveal the basis for his suspicions in the week beginning 31 October.
Lopes is seeking to charge five people in connection with the Porto Maravilha financing deal, but none of them are connected to the Trump Organization, Reuters said.
A senior executive involved in the Trump Towers Rio scheme dismissed the prosecutor’s accusation as baseless.
"Any allegations that the Porto Maravilha Investment Fund of Caixa Econômica Federal has favoured in a suspicious way the Trump Organization economic group are completely unfounded," the executive, who asked not to be named, said in an email to Reuters.
According to Reuters the Trump Organization sold naming rights for the Rio towers but did not invest in the project.
The Trump Organization valued the Trump Towers Rio scheme at $2.5bn when it announced it in 2012.
Other partners in the project were named as UK-based real-estate investor MRP International, Brazilian construction company Even Construtora e Incorporadora SA and investment-services firm Salamanca Group.
In March 2013 Cushman & Wakefield was named exclusive leasing agent for the office complex, billed as "the largest ever urban office development in the BRIC countries".
Image: The Trump Organization announced in 2012 that five triple-A, 38-storey towers bearing the Trump brand would be built in Rio (Trumptowersrio.com)
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The article is a parallel to the Trump Towers promised for Playas de Tijuana in Baja California, Mexico some years ago. It was promoted with great fanfare and at great expense. Many in the California/Baja California bought before building started. Today, some 10 to 15 years later, nothing has been built and there are numerous law suits against the developers. The Trump organization also stated that Mr. Trump had merely licensed his name and had no responsibility for the project.