The Trump Organization, owned by American president-elect Donald Trump, will remove its brand name from the only luxury hotel in South America that carried it, the Trump Hotel in Rio de Janeiro. The company said on Wednesday that the decision was due to delays in construction. Managers had expected to unveil the finished project, which cost 333 million reales ($90 million), before the start of the Olympic Games last August, but they had to open their doors with construction still underway.
The Trump Organization said that its team works hard to “meet the highest expectations” and to offer clients an “experience of unparalleled service.” The vision of the hotel no longer “fits the brand” of the American company, it said.
The Trump Hotel, built in Barra de Tijuca, an upper-middle class neighborhood where the Olympic Games were held, is the property of LSH Barra Empresas Inmobiliarias S.A, a company that is currently under federal investigation. Last October, prosecutor Anselmo Cordeiro Lopes made public his suspicions about LSH Barra during Operation Greenfield, a series of investigations into possible fraud cases that led to million-dollar losses for Brazilian pension funds.
According to Lopes, the fund that allegedly mismanaged government employees’ pensions is the same one responsible for the construction of the Trump Hotel in Rio. The “possibly fraudulent” investments comprised, the prosecutor said, 77.3 million reales (€22 million) from the securities portfolio at Serpro Social Security Institute —the institute’s second largest investment position —and 54.3 million reales (€15.3 million) from the Social Security Management Institute of the State of Tocantins.
The Rio de Janeiro hotel was Trump’s largest investment in Latin America
The Trump Organization, which only lent its brand name to the project and does not own the hotel, has not made a statement regarding the investigation. LSH Barra did not respond to this newspaper’s calls for comments. A source familiar with the project says the partnership between the American company and LSH Barra was dissolved by mutual agreement.
Two weeks earlier, the American president-elect used his Twitter account to announce that he would delegate all business responsibilities to his children and that the Trump Organization would not close any “new deals” during his time in the White House. The goal was to avoid accusations of conflict of interests between his duties as president and his objectives as a real estate businessman who owns and manages buildings in about a dozen countries. Trump will maintain ownership of the Trump Organization but said he will focus “totally” on leading the country.
Paulo Figueiredo Filho, the man behind the Trump Hotel project in Rio de Janeiro, is the grandson of the last president of Brazil’s military dictatorship. Based in Miami, the businessman has had no official link to the hotel project since January though he remains a minority investor. Yet, after the press published the story about the failed partnership – The Washington Post was the first to break the news of the divorce – he lamented the Trumps’ decision.
The hotel was slated to be ready before the Rio Olympic Games of 2016
“I was the director of that company until 2015 and my relationship with all the members of the Trump Organization was always excellent. Unfortunately, since I am no longer managing the company and I am a minority investor, I cannot interfere in decisions that I do not always agree with,” Figueiredo said in a “personal statement” published on his Facebook page.
“My reverence for the family and my admiration for businessman and president [sic] Donald Trump —with whom I share many ideas and who I supported enthusiastically during the campaign— have not changed one millimeter. As he himself said, this is part of doing business, and who knows, maybe we will do others together,” Figueiredo added.
The Rio de Janeiro hotel was Trump’s largest investment in Latin America where he only owns one luxury hotel in Panama and has lent his name to a residential building, still under construction, in the exclusive resort city of Punta del Este in Uruguay. His company also planned to build the Trump Towers in Rio, a multi-million dollar complex of five commercial buildings 150 meters high in the revamped area near the city’s port, but the project has yet to make it off the drawing board.
The Rio Trump Towers are mentioned in the federal fraud investigation. Lopes claims the Trump Organization “benefited through an investment” made by a multi-million dollar fund called Fi-fgts (managed by Caixa Econômica Federal) into the Puerto Maravilla Real Estate Investment Fund, a “vehicle for investing resources in the Rio Trump Towers.” According to Mayor Eduardo Paes (Party of the Brazilian Democratic Movement, PMDB), the project would be the biggest real estate investment made in the city. The investigation into possible mismanagement at Fi-fgts is linked to Eduardo Cunha (PMDB), the former speaker of Brazil’s Chamber of Deputies, who was arrested on bribery charges in October. Cunha is currently in jail.
English version by Dyane Jean François.