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What’s the Story with Tom Barrack?

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February 20, 2018 12:38 p.m.

I want to share with you some notes I’ve been keeping about Tom Barrack, the man who is supposedly one of the President’s closest friends and confidantes as well as a friend of Paul Manafort. He had a big speaking role for Trump at the convention. He organized the inauguration. He’s a big person in Trump World. But the first thing to know about Barrack (pronounced ‘bare-rick’) is that he is the guy Donald Trump pretends to be: he is a fabulously successful and fabulously wealthy investor, developer and manager of real estate properties on a global basis. He operates what is essentially a private equity firm called Colony Northstar (formerly Colony Capital). This is what supposedly makes Barrack such a valuable sounding board for Trump: he doesn’t need Trump or his money. Trump is surrounded by clowns, frauds and phonies. But Barrack is, when it comes to global real estate/investor titans, the real deal.

For these reasons, it’s always seemed to me that Barrack doesn’t need in on any of Trump’s rackets. But he’s also been just in the background of a number of the big developments in the Russia story. This occurred to me again when I first learned about his ties to Rick Gates, which I’ll describe below.

The following come from notes I’ve been keeping on Barrack that continue to make me curious about where he fits in Trump World and where he may fit in the Russia probe. When you read this you may say to yourself, ‘Don’t be coy, Josh. Explain how these things fit together.’ I don’t know. I don’t know whether they do or not. I put them forward more as notes on points I’m still trying to find out more about.

Let’s dig into this. And let’s start from something well before the Russia probe or even the Trump presidential campaign: the deal for DC’s Old Post Office, now Trump’s DC showcase hotel. A number of the world’s premier hotel owners bid on the project to develop the landmark building into a new hotel. Trump won the bid. But he did so in a highly unorthodox and seemingly deceptive way.

There were two key components to Trump’s bid. One was Arthur Cotton Moore, an architect and activist with old DC roots, who spent years persuading the federal government and the local community that the old post office was a community treasure that needed to be preserved. (Mid-century there were plans to tear it down.) Moore was the key driver in the whole effort to redevelop the building. Trump secured Moore’s participation in his bid. Next there was the financing, an effort spanning decades. Trump secured the financing and partnership of Colony Capital, Tom Barrack’s firm, which has impeccable credentials. Any concerns about Trump’s dubious history of corner cutting and bankruptcies would have been calmed by Colony’s participation. It’s one of the biggest real estate investors in the world. Not licensing, real investing.

But once Trump won the contract, everything changed. Moore disappeared from the picture. And Colony Capital did too. Trump took the deal to develop the building which he had won and put it up as collateral for a $170 million loan from DeutscheBank which he used along with $40 million of what he claimed was his own money to finance the project. Trump claimed at the time that “every bank wants to do this deal.” But that seems unlikely since most US banks had long ago blackballed him. For two decades DeustcheBank has been the only bank that would do business with Trump.

How did Trump get away with this? From the perspective of today, whatever bait and switch there may have been and whatever presidential emoluments issues there might be, it sort of seems no harm no foul from the GSA’s perspective. It got built. It seems to be a functioning hotel. But how did Trump hold on to the contract? It was really audacious: he took a deal secured on the basis of one kind of financing and used it as collateral to get another kind of financing. Sources inside the GSA suggest that they didn’t contest the switcheroo because they feared, not unreasonably, that a dispute with Trump would quickly become a political fight. Remember that this was right at the time that Trump was pushing birtherism full time and positioning himself as a top Obama critic.

So what was Colony’s role in all this? When asked about the change in July 2016, Colony released a statement which read: “Colony exited the joint venture after the project’s timeline became too long for the firm. As the project evolved, cheaper sources of capital for longer term investment became available to Trump. Colony simply could not compete with more attractive financing.”

There’s a possible logic to this. But it has always struck me as dubious. A contract with the federal government to build a luxury hotel right next to the White House in a city that is notoriously short of hotel rooms is a pretty sweet opportunity. Usually when you agree to a business partnership your partner can’t just back out because other capital comes available more cheaply. Deals fall apart all the time of course. But usually not so amicably or without some litigation. It really seems that Barrack and Colony just didn’t quite have their heart in it. It seems highly likely that Barrack, for whatever reason, helped Trump with this ruse.

This doesn’t seem to have anything to do with the Russia story. But it’s almost seem relevant to the relationship between the two men. Where Barrack comes into the Russia mix is with Paul Manafort.

Several times I’ve written about just how Paul Manafort came to work for Donald Trump (here and here especially). This has always been a mystery because Trump needed Paul Manafort like a fish needs a bicycle. For all the rationales and explanations, it never made sense. The most credible story we have, likely true as far as it goes, is that Manafort came to Trump by way of Tom Barrack. They met for coffee in Beverly Hills. Manafort wanted to get ‘back in the game’. Barrack knew Trump needed experienced help. The story has always been muddled about who was the instigator and what the logic of the whole thing was. But a memo to Trump followed the coffee and that led to Manafort joining the campaign. In these accounts Barrack and Manafort are described as friends or longtime friends.

Perhaps it’s no more than this. This is why people build personal and professional networks. Friends led to jobs and tips and opportunities. But given Manafort’s central role in the Trump/Russia story, I’ve always been reluctant to write this off as a meaningless connection – especially because the description of what and why it happened has always been so contradictory and muddled.

Does Barrack have some Russian connection? Not as far as I can tell. He did write an essay for Fortune just before the 2016 election calling for a ‘Marshall Plan for the Middle East’. A centerpiece of that argument was that to accomplish anything, the US needed to become more friendly and less confrontational with Russia. That was certainly in line with the Trump campaign agenda. So maybe it’s no more than that. Barrack’s real professional background and interest is in the Middle East. His family background is in Lebanon and he got his professional start in the Gulf.

My interest in this connection with Manafort was peaked again only a few days ago when I learned some new details. I don’t think this is new information. Just new to me.

After Manafort was fired from the campaign in August, Gates remained, though apparently with significantly less access and clout. (Some reports suggest he was reassigned to the RNC to manage liaison between the RNC and the campaign.) Once Trump won the election, Barrack was chosen to head Trump’s inaugural committee. He hired Gates as his deputy. Once the inaugural committee shut down, Gates briefly tried to set up a lobbying shop, America First Policies. When that plan fell apart in the face of adverse press, Barrack hired him to work for him directly, as a consultant to Barrack at Colony NorthStar Inc. Barrack said Gates was “working on investigating and understanding the next set of opportunities in digital infrastructure: data centers, radio towers, communications technology, media.” BizNow says he was running Barrack’s DC office. Gates continued to work for Barrack down to the day his indictment was unsealed on October 30th, 2017.

Step back and what this suggests is that Barrack kept Gates with a salary for about exactly a year after the campaign ended. That is during a time when it was widely known that Gates was the subject of a criminal investigation. I don’t know if we should assign some meaning to this. But it does renew my curiosity about how Manafort and Barrack know each, what their relationship is and how that played into Manafort’s entry into the campaign. Perhaps this is no more than hiring someone who’s good for the job or perhaps helping someone out during a difficult period. But I’m skeptical.

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