A Brazilian prosecutor has opened a criminal probe into investments made by state pension funds in Trump Towers Rio. It alleges state agencies favored the interests of the 'The Trump Organization.'
The size, structure and high risk level of the investment meant it "required investigation," Anselmo Lopes, a federal prosecutor in the capital, Brasilia, said in the document dated October 21 opening the inquiry. The court filing was reviewed by news agency Reuters on Tuesday.
Lopes alleged that state agencies "favored, in a suspicious manner, the economic group The Trump Organization," among others. However, according to a disclaimer on the Trump Organization's website, Trump Towers Rio "is not owned, developed or sold by Donald J. Trump, The Trump Organization, or any of their principals or affiliates." The project's developer, the Bulgarian real estate company MRP Group, licensed the name from another company, DT Marks Rio LLC.
The revitalization project - known as "Projeto Porto Maravilha” (Project Marvelous Port) - has been the subject of a federal investigation into claims of favoritism in the selection of financing projects backed by investment funds from state-owned companies.
According to Brazilian authorities, $2.5 billion (2.2 billion euros) in public funds were lost as a result of investments which went bad.
"Investing amounts of such size, for these (relatively small) pension funds, breaks principles for diversification and liquidity," Lopes said in the document.
"It is necessary to verify if the favoritism shown by the pension funds towards LSH Barra Empreendimentos Imobiliários SA and the Trump Organization - run by the Republican presidential candidate Donald Trump - was due to illicit payments and bribes," Lopes said in the 15-page document. No money from the Trump Organization was reported to have been invested in the project.
The 130 million reais (36 million euro) investment was made by the two small funds - one for state IT firm Serpro and the other the Igeprev fund for employees of Tocantins state - in the developer LSH Barra Empreendimentos Imobiliários SA. It built the Trump Hotel Rio de Janeiro, a beachfront property with 170 rooms, near where the Olympic Park.
Plans to build the hotel were announced in 2014 and it was meant to be ready for the Olympics held in August, but delays meant it was only partially open during the Games.
The investigation is part of a wider probe into fraud at Brazilian state pension funds in which bribes were allegedly paid to secure investments.
Trump Organization denies wrong doing
The Trump Organization and LSH Barra Empreendimentos Imobiliários SA have denied any wrongdoing. They said they have not been informed of either investigation and said all their business dealings had strictly complied with Brazilian law.
"We have no relationship or involvement with these pension funds," said Alan Garten, executive vice president and general counsel at The Trump Organization. "We have an arm's length agreement with the developer where we were hired to provide a service. "In time, I think the investigator will realize that these types of things wouldn't involve us and don't involve us," he added.
jbh/jm (Reuters, EFE)