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Trump Firm Quits Brazil Hotel Project That Was Named in Criminal Inquiry  June 18, 2019 – 08:59 am
The Trump Hotel Rio de Janeiro. A spokeswoman for Trump Hotels said that the decision to pull out of the project was made because of problems in completing the luxury property.
Lianne Milton for The New York Times

RIO DE JANEIRO — The Trump Organization says it is pulling out of a troubled hotel project in Rio de Janeiro, just weeks after a federal prosecutor opened a criminal investigation that included the hotel and another Trump venture in the city.

The criminal inquiry names both the Trump Hotel Rio de Janeiro and a Trump Towers project in the city. But many other investments that have nothing to do with President-elect Donald J. Trump or his organization are also being investigated, including Brazilian real estate, energy and manufacturing ventures.

A spokeswoman for Trump Hotels said in a statement that the decision to pull out of the Rio hotel project was made because of problems in completing the 13-story, 171-room luxury property. It was opened for the Rio Olympics in August before several floors and facilities were finished, including a 4, 000-square-foot nightclub.

“Unfortunately, the developers of the Rio de Janeiro hotel are significantly behind on the completion of the property, and their vision for the hotel no longer aligns with the Trump Hotels brand, ” said Jennifer Rodstrom, the spokeswoman for Trump Hotels.

Ms. Rodstrom did not immediately respond to a question about whether the decision was made in response to the criminal investigation. The hotel uses the Trump name, and the Trump Organization has been managing the property. But it does not have an equity stake in the hotel, which is owned by LSH Barra, a Brazilian company based in Rio. The move by Trump Hotels to stop managing the hotel was first reported by The Washington Post.

Mr. Trump’s business dealings have come under intense scrutiny in countries around the world. In, Argentina, Scot and other nations, Mr. Trump’s ventures have raised questions and concerns, particularly over potential conflicts of interest that could arise between his business activities and his role as president.

In the United States, one federal agency, the Office of Government Ethics, has said that Mr. Trump must divest from his properties to eliminate potential conflicts.

On Wednesday, House Democrats issued a letter suggesting that the General Services Administration — which essentially serves as the landlord for the federal government — had concluded that Mr. Trump would breach the lease that his company has to operate a hotel in a federally-owned building on Pennsylvania Avenue the moment he is sworn in.

The Democrats said that the agency’s deputy commissioner had made this statement in a briefing to House staff members earlier this month, citing a provision in the 60-year lease with the Trump Organization that prohibits it from being held by any federal government employee.

But shortly after the Democrats issued their letter on Wednesday, the agency said that it had not yet reached such a conclusion.

“We can make no definitive statement at this time about what would constitute a breach of the agreement, and to do so now would be premature, ” a spokeswoman for the agency, Ashley Nash-Hahn, said in a statement.

A decision on this question, she added, will not likely come until Mr. Trump takes office.

The hotel project was conceived by Paulo Figueiredo Filho, a right-wing businessman who said that he gained Mr. Trump’s interest in managing the property by boasting of family ties: Mr. Figueiredo Filho is the grandson of João Figueiredo, the last military dictator in an authoritarian government that ran Brazil from 1964 to 1985.

Anselmo Henrique Cordeiro Lopes, a federal prosecutor in the capital, Brasília, opened the criminal inquiry in October, identifying $40 million in investments in the hotel made by two small Brazilian pension funds. One invests on behalf of retirees of a state-controlled information technology firm; the other manages the pensions for civil servants in Tocantins State.

In legal filings, Mr. Lopes said that he was examining why the two pension funds invested so much of their capital in the venture, positioning his inquiry within a broader federal investigation of graft at Brazil’s pension funds, pillars of the economy that have been involved in an array of scandals in recent years.

As part of the same investigation, Mr. Lopes is also focusing on the Trump Towers Rio, a project to build five futuristic office towers in downtown Rio that was announced in 2012 in conjunction with MRP, a Bulgarian real estate company. Unlike the Trump Hotel Rio, the partners in the downtown venture have not started construction.

Mr. Lopes is examining whether the Trump Organization and MRP illegally benefited from support for the office-tower complex from a huge public bank, Caixa Econômica Federal.


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