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What you need to know for 07/28/2017

Russian developer helps out Kremlin on occasion — was he conduit to Trump?

Russian developer helps out Kremlin on occasion — was he conduit to Trump?

'This is obviously very high-level and sensitive information'
Russian developer helps out Kremlin on occasion — was he conduit to Trump?
President Donald Trump observes the third round of the U.S. Women’s Open on July 15, 2017.
Photographer: Eric Thayer/The New York Times

MOSCOW — Russian Island, near the port city of Vladivostok in the far east, was a decaying former military base and home to a scattering of cattle when President Vladimir Putin suddenly envisioned it as a $1.2 billion campus where he could welcome heads of state for an Asia-Pacific conference.

That sent Kremlin officials scrambling to find a developer to transform a site lacking fresh water, a pier or roads. They rejected numerous bids before one of them took a flyer on a man known mostly for his glamorous shopping malls: Aras Agalarov of the Crocus Group.

A little more than three years later, in 2012, Putin opened the spectacular Far Eastern Federal University, some 70 modern buildings built in a crescent overlooking the sparkling Pacific Ocean.

Not long after, Putin pinned a blue-ribboned state medal, the Order of Honor, on Agalarov’s chest at a dazzling Kremlin ceremony. Soon, a string of demanding, more prominent projects followed: a stretch of superhighway ringing Moscow; two troubled stadiums for the 2018 World Cup, including one in a Baltic swamp.

Agalarov, 61, also worked on a project with a future president, Donald Trump. Last week, the Russian developer and his crooner son and heir, Emin, were thrust into the swirl of speculation about whether the Trump campaign colluded with the Kremlin to influence the 2016 election.

Their names popped up in emails about arranging a meeting with Donald Trump Jr. and a Russian lawyer who claimed to have incriminating information about Hillary Clinton but the president and his son have both insisted that nothing of value was provided.

“This is obviously very high-level and sensitive information but is part of Russia and its government’s support for Mr. Trump — helped along by Aras and Emin,” wrote Rob Goldstone, a music producer and publicist working for Emin.

While there is no indication beyond what was said in the emails that the Agalarovs were serving as a conduit between the Kremlin and the Trump campaign, wealthy and well-connected businessmen are often called on to do the bidding of the Russian government.

Kremlin analysts stress that its red, crenelated walls conceal not a well-oiled machine but a hornet’s nest of interests and influences competing to dominate an Erector Set of ad hoc policies and sudden opportunities, many of them highly lucrative.

When it comes to exploiting those opportunities, the Kremlin often ignores its own bureaucrats, diplomats and other agents in favor of someone it thinks will get the job done — a charmed group whose members rise and fall in status along with their usefulness to Putin and his top aides.

In that context, analysts find it entirely plausible that the Kremlin would tap Agalarov, a construction tycoon with a web of contacts to Trump, as a way to pass information to the Trump presidential campaign.

“In a sense, almost no one is a direct agent of the Kremlin, but almost anyone can become one if the need arises,” said Ekaterina Schulmann, a political scientist at the Russian Presidential Academy of National Economy and Public Administration.

Alexei A. Navalny, the leading opposition figure in Russia and an anti-corruption campaigner, says he has no doubt that the Agalarovs would do the bidding of the Kremlin if asked.

In a blog post, Navalny refers to Yuri Chaika, the Russian state prosecutor — a position equivalent to the U.S. attorney general — whom Goldstone identified in his emails as the source of the information on offer at the Trump Tower meeting. Chaika, a staunch Putin loyalist, has been in that position since 2006.

In the view of Navalny, a bitter opponent of Putin, it makes perfect sense that information passed from the Kremlin through Chaika and Agalarov to Trump, as the security services could easily have used such a trusted channel to reach out to the Trump campaign.

That is no more than informed speculation, yet there are deep connections among the men. After Navalny released a documentary in 2015 accusing Chaika of corruption, for example, Agalarov rose to his defense. Writing in the newspaper Kommersant, he said the film mixed fact and fiction and echoed the work of Joseph Goebbels, the chief Nazi propagandist.

Natalia Veselnitskaya, the lawyer who met with the younger Trump, and her former husband both worked in the prosecutor’s office of the Moscow region, the district surrounding the capital, and would have been under Chaika’s overall umbrella.

Veselnitskaya has done some legal work connected to real estate for Agalarov’s company in Russia, according to media interviews given by the family lawyer in the United States, Scott Balber.

Trump entered this circle with the 2013 Miss Universe contest, carried out with the help of lower-level bureaucrats and Agalarov, who paid $20 million to bring the pageant to his family’s Moscow concert pavilion, Crocus City Hall.

It would be natural for the Kremlin, aware of that relationship, to reach down to that level to try to get something done with the Trump campaign, analysts said.

“If you are a business person, you are supposed to do something that the Kremlin asks you; you are otherwise free to pursue your own interests. That is how Russia works,” said Schulmann, noting that most would be eager to respond to any such call as an expression of loyalty.

In this particular case, the Kremlin has denied any involvement, saying it was not in touch with Agalarov and did not even know the lawyer, Veselnitskaya. It is unclear precisely what was discussed at the meeting with members of the Trump team. Participants have said that it dealt largely with a U.S. law called the Magnitsky Act, which blacklists those suspected of human rights abuses in Russia, and a ban on the adoption of Russian children, and that nothing of significance was given to the campaign.

Agalarov, in a Russian radio interview, called the story around the meeting — that it was about information damaging to Hillary Clinton — a “fabrication.”

The Crocus Group did not respond to a request to interview Agalarov.

For Agalarov, the involvement in the Trump administration’s Russia scandal is at best an unwelcome diversion in a career of steady if not always spectacular success.

He was born in Baku, the capital of Azerbaijan, then part of the Soviet Union, where he studied computer engineering and was a member of the Baku City Committee of the Communist Party.

He went to Moscow to study, and even before the collapse of the Soviet Union began trying to fill pent-up Russian demand for Western goods, especially computers.

What started as a modest trading company grew into a business organizing trade fairs that eventually mushroomed into the Crocus Group, a real estate empire that encompasses mammoth shopping malls, a chain of hypermarkets, an exposition center, restaurants, luxury housing developments and other enterprises.

Forbes magazine puts Agalarov 51st on its list of the richest Russians, with a fortune estimated at $1.7 billion.

“He is not the biggest retail guy, but Crocus City Mall was the first luxury mall to appear in Moscow,” said Darrell Stanaford, a 20-year veteran of the Russian real estate world as the former managing director in Moscow for the CBRE Group, a Los Angeles-based commercial real estate firm. “He likes the glitz. It is high-end luxury, so that is why he becomes such a good matchup for Trump.”

Agalarov keeps a modest footprint on social media, mostly by standing next to his photogenic son: on their luxury Moscow golf course development, for example, or posing with Robert De Niro at the opening of one of the two Nobu restaurants in Moscow where they are partners.

Trump pops up from time to time. On his Inauguration Day, both Agalarovs posted old pictures of themselves with him, along with effusive praise for their old friend.

Aside from the 2013 Miss Universe contest, it is not known what business ties, if any, the Agalarovs have with Trump, or with any other U.S. companies. They clearly have an affinity for the United States, however, naming one chain of shopping malls “Vegas” and another luxury residential complex “Manhattan.”

In November 2013, after the buzz of the Miss Universe pageant in Moscow had subsided, Trump met privately with a group of elite Russian businessmen, including the head of Russia’s state-owned Sberbank at one of the Nobu restaurants in Moscow.

The elder Agalarov had been talking with Trump about building a Trump Tower in Moscow as part of a $3 billion real estate project involving hotels, a shopping center and office space.

Sberbank was ready to make it happen. About a week after the meeting, the bank announced a “strategic cooperation agreement” with the Crocus Group to finance about 70 percent of the ambitious project, including, potentially, a building bearing the Trump name.

“It was one of the 14 buildings that we planned to build here,” Agalarov’s son Emin said in a March interview with Forbes, adding that if Trump “hadn’t run for president, we would probably be in the construction phase today.”

The Sberbank financing — reported at the time as the biggest real estate development loan the bank had made — was another measure of the Agalarovs’ increasingly close connections to the centers of power in Russia.

In another indication, the Crocus Group was written into a 2014 bilateral treaty with the government of Kyrgyzstan to help that country integrate into Russia’s regional alliance, the Eurasian Economic Union.

In that deal, worth $127 million, the Crocus Group was designated the “single supplier” of services to integrate the two countries’ bureaucracies and reinforce the new customs common border, by, for example, building new border posts.

By naming the company in an international treaty, the Russian government avoided opening the work to competitive bidding, ensuring that the Crocus Group won the contract, Edil Baisalov, a former Kyrgyz presidential chief of staff, said in a telephone interview.

In Kyrgyzstan, he said, the apparent giveaway to Kremlin-connected insiders became known as “Crocusgate.”

Agalarov mentions occasionally how difficult it is to earn money on public works, telling the newspaper Vedomosti in 2015 that he had to buy a larger Gulfstream jet to make the cross-continental trek to Vladivostok to check on progress at the Far Eastern Federal University. On that project, he said, he spent more than $100 million of his own money because the official plans skipped significant costs like roads and landscaping. He won some of it back in court.

Statements about losing money are all part of the game, analysts said, noting that construction costs on Russian infrastructure routinely run 30 percent higher than for comparable projects in Europe.

“It is showing the wounds that he got in the service of the motherland,” said Schulmann, the political scientist. “You see how indifferent I am to profit when I do a service for the Kremlin. I have to make sacrifices.”

Agalarov, however, was more candid than most when asked whether it is altruism that leads him to respond when the Kremlin calls. In the interview with Vedomosti, he said, “There are things that you cannot turn down.”

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