Exclusive: Court action seeks probe of Trump’s Scottish golf course buys

[May 24, 2021]  By Jason Szep and Tom Bergin

(Reuters) - The Scottish government is facing a new legal challenge over its February rejection of a motion to investigate former U.S. President Donald Trump's all-cash purchases of two golf courses, reviving an effort to force Trump to disclose how he financed the deals.

Avaaz, a global human rights group, filed a petition in Scotland’s highest court seeking a judicial review of the Scottish Parliament's 89-to-32 vote against issuing an "unexplained wealth order" to Trump’s business. The proposed order sought details on the source of the money the Trump Organization used to buy the courses in 2006 and 2014.

The petition, which has not been previously reported, was served on Scotland's government on Monday. It was filed with the court late on Thursday.

Trump, after decades of buying properties with debt, spent more than $300 million in cash purchasing and developing the Scottish courses, neither of which has turned a profit. Some Scottish politicians have cited mounting investigations into Trump’s U.S. financial interests as grounds to scrutinize his business dealings in Britain.
 

The British government introduced unexplained wealth orders in 2018 to help authorities fight money laundering and target the illicit wealth of foreign officials. The orders do not trigger a criminal proceeding. But if the Trump Organization couldn’t satisfy the court that the money was clean, the government, in theory, could seize the properties.

The 13-page petition filed by Avaaz alleges that the politicians who voted against the motion did so based on a flawed legal interpretation.

On Feb. 3, the Scottish Parliament rejected the motion seeking the order, which had been introduced by the Scottish Greens party. Before the vote, Humza Yousaf - the justice minister and a member of the ruling Scottish National Party - called Trump “deplorable” but argued that unexplained wealth orders should be instigated by law enforcement officials rather than politicians. “There must not be political interference in the enforcement of the law," Yousaf said.

Yousaf said that the Civil Recovery Unit - an enforcement authority reporting to Scotland's most senior legal officer, the Lord Advocate - should “undertake the investigatory role.”

Avaaz challenges that reasoning in its court action, which asks the Court of Session in Edinburgh to rule that Scotland’s ministers have sole responsibility to determine whether to apply for an unexplained wealth order and cannot delegate that responsibility to other people or institutions.

It also argued that the legal standard for issuing the wealth order against Trump had been met and that Scotland's leaders had failed to perform their duty. If the court sides with Avaaz, the government would need to make a decision. The ministers could, in theory, decide to pursue the wealth order against Trump. Or they could find a new argument for rejecting it but that may open them up to further litigation.

A spokesman for Trump did not respond to a request for comment. His son, Eric Trump - a director of the Scottish golf courses - said in February that Scottish politicians who supported the unexplained wealth order were “advancing their personal agendas” and that the Trump Organization had “made an overwhelming contribution to the leisure and tourism industry.”

CALL TO ‘TAKE ACTION’

Avaaz lawyers and opposition politicians - including members of the Greens, Labor and Liberal Democrat parties - have criticized the majority’s interpretation of the law governing unexplained wealth orders.

“It raises eyebrows as to why Ministers are not availing themselves of this ability to put questions to the Trump Organization,” said Nick Flynn, legal director at Avaaz, a nonprofit that has pressed for the Scottish probe since 2019 as part of its global push for investigations into Trump. “If Trump can't explain the source of the money, then the Scottish government has the responsibility to take action."

U.S. property magnate Donald Trump practices his swing at the 13th tee of his new Trump International Golf Links course on the Menie Estate near Aberdeen, Scotland, Britain June 20, 2011. REUTERS/David Moir

In 2006, Trump bought 1,000 acres in Aberdeenshire for more than $10 million. Since then, he’s spent another $60 million building a golf course, a small hotel and a handful of holiday cottages, according to company filings with the UK corporate registry. The Trump Organization has said in public statements and filings that it has spent a total of more than $140 million on the development.

Trump, an avid golfer whose mother was Scottish, made a bigger investment in Turnberry, a seaside course that has four times hosted The Open - Europe's only golf major. In 2014, he bought Turnberry’s course and resort for $60 million. Company filings in the UK show that Trump’s company spent another $100 million on course upgrades and other expenses.

In addition to the Turnberry and Aberdeenshire courses, Trump purchased five other golf properties outside Scotland in all-cash deals. In 2016, Trump told Reuters that the operating losses at his courses didn’t matter because his “big play” was developing real estate at the properties.

But Trump appears to have made little progress in executing that play, according to a Reuters examination https://www.reuters.com/
investigates/special-report/trump-golf of satellite imagery and U.S. and European property filings. The report, published last year, showed that the Trump Organization hasn’t built a single home over the past decade at any of the 11 golf properties the business owns outright, according to land records and the president’s financial disclosures.

DISPUTED QUOTE ABOUT RUSSIAN MONEY

Patrick Harvie, leader of the Greens, has expressed concerns in Scottish Parliament over how the courses were funded. “Big questions remain over Trump’s business dealings in Scotland,” he said in February 2020. The purchase of the two courses, he said, "were part of Trump’s huge cash spending spree in the midst of a global financial crisis, while his son was bragging about money pouring in from Russia.”

Harvie was referring to a comment attributed to Eric Trump by veteran golf writer James Dodson, who relayed a conversation with Trump’s son in a 2017 interview with National Public Radio. Dodson said Eric Trump told him the courses were financed with money from Russia.

Eric Trump has denied making the comment about Russian money to Dodson and called Harvie's comments in Scottish Parliament false. Donald Trump has denied that he used any money from Russian sources to buy the Scottish golf courses.

Reuters interviewed Dodson, a Golf Magazine columnist and the biographer of golf legend Arnold Palmer. He said Eric Trump made the remark about Russian money while the two were talking at Donald Trump's golf club in Charlotte, North Carolina, in August 2013. Dodson said the golf industry was going through financial difficulties when Trump purchased a number of clubs and that banks were reluctant to provide loans for golf course investments.

“It was really a simple question,” Dodson said. “I said: ‘How are you funding all these acquisitions?’ He said: ‘We don't rely on American banks. We get all the money we need from foreign investors’. And I remember asking if he meant the Chinese. And he said, ‘No, we get all the money we need to get right out of Russia’."

A spokeswoman for the Trump Organization said Dodson’s recollection was incorrect.

(Reporting by Jason Szep and Tom Bergin; editing by Brian Thevenot)

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