The art of the deal runs into the reality of “a really scary place.”
Thirty years ago, in July 1987, Donald and Ivana Trump flew to the Soviet Union, apparently at the invitation of the Soviet ambassador to the United States, in order to scout locations for a Trump hotel in Moscow. “It was an extraordinary experience, ” Trump wrote in The Art of the Deal. “We toured half a dozen potential sites for a hotel, including several near Red Square.” He came away “impressed with the ambition of the Soviet officials to make a deal.” And yet a deal was never struck, neither then nor in 1996, when the Moscow real-estate market really cranked up and Trump tried to bid on a renovation of Hotel Rossiya near the Kremlin. Nor did anything come to fruition in 2008 when Trump announced plans to build in Moscow, St. Petersburg, and Sochi; nor in 2013, when he visited Moscow and said he was going to build a Trump Tower there with the help of Russian mega-developer Aras Agalarov. In June 2015, shortly before declaring his presidential candidacy, Trump bragged to Bill O’ Reilly that, “I was over in Moscow two years ago and I will tell you—you can get along with those people and get along with them well. You can make deals with those people. Obama can’ t.” At the time, it has since been reported, Trump’s surrogates Felix Sater and Michael Cohen were actively pursuing another real-estate development on Trump’s behalf in Moscow, but, by winter of 2016, that project was moot, too.
The American president has often bragged about his ability to cut deals and about how well he gets along with the Russians. The press and investigators have speculated about the extent of his connections to the Russian business and political elite. And yet, when it came to Trump actually building something in Moscow, he fell short. When the president said, shortly after his inauguration, “I don’ t have any deals in Russia, ” he wasn’ t wrong. The question is why. When just about every other major hotel chain in the world was able to build in Moscow and beyond, why couldn’ t Trump close a deal in Russia? The absence of Trump real estate in Russia, it turns out, is a revealing reflection of the disconnect between the image Trump projects and the reputation he and his surrogates have established in Russia. In part it was because, as Donald Trump Jr. once said himself, Russia “really is a scary place.” In a 2008 interview with a small trade publication, Trump Jr. said that he had taken “half a dozen trips to Russia in the last 18 months” and that “several buyers have been attracted to our projects there.” But there was something getting in the way of those trips adding up to a Trump Tower Moscow. “It is definitely not an issue of being able to find a deal, ” Trump Jr. said, “but an issue of ‘Will I ever see my money back out of that deal or can I actually trust the person I am doing the deal with?’ As much as we want to take our business over there, Russia is just a different world.… It is a question of who knows who, whose brother is paying off who, etc.”
Trump Jr., who did not respond to request for comment, was right: The world of Russian business is a dark and treacherous place, and Moscow real estate is one of its darkest corners. “Moscow is like New York in many ways, just way more corrupt, ” says a Western real-estate developer in Russia, who asked for anonymity in order not to jeopardize local partners and ongoing business deals. “To pull a building out of the ground, you need so many permits, so many authorizations—the mind reels. And all of it is so corrupt, it’s insane.” To navigate all this, the Trump Organization would have needed a local partner that was not just a capable developer, but had the right political connections to secure all the necessary permissions. “You need a good Russian partner, otherwise there’s no way, ” says Mark Stiles, an American businessman who had extensive real-estate holdings in Russia. “As much as we want to take our business over there, Russia is just a different world.” In 2013, Trump worked with Agalarov, who had stellar connections at the very zenith of Russian political and business life. But that deal went sour after it caused a scandal in Kyrgyzstan—long story—and after the Russian economy took a nosedive in 2014. But at other times, Trump’s man on the ground was Felix Sater, a Russian-born wheeler and dealer from the Russian-immigrant enclaves of Brooklyn. Sater, who declined to comment on the record for this story, once served a year in an American prison on an assault conviction after he stabbed a man in the face with the stem of a broken margarita glass. Not long after he got out of jail in the mid-90s, he was charged with securities fraud. Sater struck a deal to avoid prison time by becoming an FBI informant—a role that included providing the U. S. government with Soviet-era weapons purchased from an arms dealer.
In 2002, Sater, who was renting office space in Manhattan’s Trump Tower, worked his way into Trump’s inner circle. In 2004, Sater started traveling to Moscow and tried to put together Russian real-estate deals for Trump. One potential deal, a Trump building on the territory of Moscow’s Soviet-era Sacco and Vanzetti Pencil Factory, fell through when the Russian partner was unable to get the right permits. In late 2007, in addition to his work for Trump, Sater also began serving as an adviser to the real-estate developer Sergei Polonsky, a flamboyant builder who has called himself Russia’s Donald Trump. (“And yet he’s gone bankrupt twice, ” Polonsky said of Trump, according to the Russian news agency RIA Novosti, “and I haven’ t, ever.”) Polonsky, who named his son after his development company, Mirax, was behind some of Moscow’s hottest developments. Sater was tasked with helping Polonsky develop international projects, but only one ever came to fruition. This didn’ t exactly surprise Polonsky’s lieutenants. Alexey Kunitsin, who at the time was chairman of the board at Mirax, told me that Polonsky had been warned about Sater and his past, but Polonsky didn’ t care. “I would never hire somebody like that, ” Kunitsin said. “You can’ t trust him in any way, not in a professional setting, not in a personal setting. You could see it very clearly. He was telling constant crazy stories, wild fantasies about all the people he knew. He was not a balanced dude. He’s very emotional and gets into conflicts very easily.” Kunitsin recalled that Sater would also brag to his coworkers at Mirax about how good he was at spending all the money he allegedly earned. “It didn’ t really inspire confidence, especially when he described it all so colorfully, ” Kunitsin said. Another former Mirax employee who dealt with Sater paints a similar portrait. “He’s not a serious person, ” the former Mirax employee said. “He’s not a total bullshitter, he can do some things, but he’s also a bullshitter. He tries to create the impression of someone who is extremely well-connected and very busy.”
That Sater raised suspicions and turned Moscow businessmen off with tales of conspicuous consumption, in a city where it is practically a sport, is deeply telling. “You really have to be very talented to do that, ” said a prominent Russian real-estate consultant, who spoke on condition of anonymity because he worried that speaking to a journalist would jeopardize his professional relationships in Moscow. “And most people didn’ t take him seriously. He was ready to pay for a few bottles of Cristal in the club, but was not someone you want to make a serious deal with.” Polonsky was hard hit by the 2008 financial crisis, which also killed off Trump’s plans for building Trump buildings in Russia. But this didn’ t derail Sater, who ditched Polonsky and, in 2010, became a senior adviser to Donald Trump, according to his business cards and email signature. That year, he was working on Trump’s development plans in Russia, again. And he ran into trouble, again. Sater told people in Moscow he had a signed authorization from Trump to enter into negotiations on his behalf, but because of Sater’s flamboyant manner, few people believed the document was authentic. “He was walking around with a power of attorney or something from Trump, ” the Russian real-estate consultant said of Sater. “It was a very suspicious-looking document.” Sater’s reputation continued to haunt him, even in Russia. “In 2010 when you Googled him you got a story form The New York Times about his past and it made things difficult for him, ” says the former Mirax employee, referring to a 2007 article by Charles Bagli. The piece was the first to dredge up Sater’s checkered history and to put it in one, reputable place. Sater tried spelling his name “Satter” but it didn’ t help.
A boutique Moscow PR agency offered to help rehabilitate his image. “Nice people [in Moscow] didn’ t want to do business with him, ” says a representative of the now-defunct agency. His assessment of Sater’s dilemma, which he shared with me on condition of anonymity, was stark. “Your mass media image today is the classical negative image of businessperson who is likely to be connected a criminal, ” the PR agency wrote to Sater in September 2010. “Your media image is created by a third party, not you. You [sic] story is covered by media sources in a negative fashion. As a result, it affects even neutral news on your persona.” (Sater did not end up hiring them.) It also didn’ t help that Sater was a freelancer, and an outsider. He may have been born in Moscow, but he had left as a child. Despite a stint in Moscow in the 1990s, his return visits were brief and sporadic, his Russian accented by his long life in America. He would have read to Russians as an American, a foreigner. He had no obvious krysha, or “roof”—political protection as insurance against things going sideways.
