One of the central concerns raised about Donald Trump’s presidency is that his family’s global business empire will end up creating inevitable conflicts of interest. Will policy decisions be made with an eye toward how they impact The Trump Organization’s bottom line? The clearest evidence of that seems to be happening right now in Panama, a country where the Ocean Club, one of Trump’s most lucrative properties, is located.
A simmering dispute between the hotel-condo complex’s new owners and The Trump Organization (which has managed it and collected licensing fees for the use of its name) hit the headlines recently when Trump staffers were forcibly removed from the property, leading to an investigation by Panamanian prosecutors. Sources close to the prosecutor’s office tell Fast Company that the probe is ongoing. The Ocean Club complex has reportedly earned The Trump Organization at least $50 million in management and licensing fees since it opened in 2011.
Panama is a close ally of the U.S. and plays a key role Central America, especially when it comes to expanding trade and combatting drug trafficking.
On Monday, it was revealed that The Trump Organization’s lawyers wrote a letter to Panamanian president Juan Carlos Varela asking him to intervene in the dispute “to avoid potential damage to the Panamanian state,” reports Panama’s La Prensa. The request was made just days before an emergency arbitrator declined to reinstate the Trump management team. Such a direct appeal to the country’s president has the potential to turn a legal dispute into a diplomatic matter and could be just the first of many conflicts of interest for the White House, says former U.S. ambassador to Panama John Feeley, who resigned in January due to his disagreement with the Trump administration’s foreign policy approach.
As the Washington Post‘s David Farenthold noted, this is the first known instance of The Trump Organization appealing to a foreign leader for help with a business dispute since Trump became president.
Feely told Univision to expect the blurring of ethical lines between public and private interests. “American diplomats will stay away from involving themselves and refer the issue to the White House, but what happens when members of the First Family meet with sovereign heads of state to seek advantage for the President’s bottom line?” he said.
In a detail that almost perfectly encapsulates the potential conflict of interest, the U.S. embassy in the country, when asked for comment, told La Prensa that “matters related to The Trump Organization are sent directly to the White House.”
The Trump Organization’s letter to Varela stated that a recent court ruling removing the company from management of the hotel was a “clear violation” of a 1983 agreement protecting the rights of U.S. investors in Panama. Late on Monday, the company released a statement calling the letter a “routine” legal tactic, noting that the Panamanian law firm that sent it to Varela had not even sought The Trump Organization’s approval beforehand.
But obviously, it was not enough to sway the Panamanian government, with a Panamanian minster telling the paper that the president “can not interfere in a matter that is the exclusive competence of the judicial branch or an arbitrator.”
Former Panamanian comptroller Alvin Weeden was even more harsh in his criticism, telling La Prensa that the request to Varela was “a great impropriety and an act outside of moral foundation,” adding that he considered it “an attack and a violation of national sovereignty that must be rejected.”
“Friends” In High Places
Another potential conflict of interest, outlined by Fast Company last year, involves the extradition of former Panamanian President Ricardo Martinelli, who is wanted on multiple corruption charges and currently lives in Coral Gables, Florida. Martinelli, who helped Trump open the Ocean Club back in 2011 and was on the board of a bank that acted as a trustee for the complex, is vigorously fighting the current Panamanian government’s request to extradite him.
The U.S. government is proceeding with the extradition process, but Martinelli’s lawyers have fought back in a federal court in Florida. The former president is seeking to revive his political career with the aim of running for mayor of Panama City—the country’s capital and largest city—and fears being imprisoned or worse in Panama if he is extradited.
In his latest motion to stop the extradition, Martinelli accused Varela of corruption, denied the charges against him, described in detail his poor health, and even cited his friendship with Trump. Describing why he is entitled to “a certain amount of respect and dignity,” Martinelli quoted President Barack Obama’s praise for the Panamanian president a few years ago. And he noted: “Then private citizen Trump also considered President Martinelli a friend.”
In its reply, U.S. government lawyers shot down each of those arguments as “meritless,” claiming that Martinelli should be considered a serious flight risk and stating that fugitives with a personal status or “privileged backgrounds are not more entitled to release than those who have nothing left to lose.”
Martinelli’s lawyers declined comment to Fast Company. The Trump Organization’s lawyers did not respond to requests for comment from the Associated Press, La Prensa, and Univision.
With reporting by Annie Mendez.