The colossal New York City real estate deal in which a Chinese company was to bail out a failing building and enrich the family of President Trump’s son-in-law and advisor Jared Kushner with $400 million in straight cash has been shelved in the wake of conflict of interest concerns.
The transaction with the Chinese insurance company Anbang – which experts have called unusually favorable to the Kushner’s – was for the sale and renovation of a 41-story office tower at 666 Fifth Avenue, not far from Trump Tower.
A Kushner Company spokesman confirmed the deal was off in an email to The Hill, which said, “our firms have mutually agreed to end talks regarding the property.”
The Kushner spokesman added that they are in “advanced negotiations” with others who might become investors.
The conflict charges were raised last week in a letter sent to Treasury Secretary Steven Mnuchin and the Office of White House Counsel by Senators Elizabeth Warren (D-MASS), Tom Carper (D-DE), Sherrod Brown (D-OH) and Rep. Elijah E. Cummings (D-MD) which raised questions about Anbang, which is said to have links to the Chinese government.
The lawmakers, according to a statement from Warren’s office, “expressed concern about the possible conflicts of interest that would result from such a transaction, as well as its potential implications for national security.”
Anbang has tried to downplay its connections to the Chinese government, but last year President Barack Obama chose not to stay at the Waldorf Astoria Hotel in Manhattan – after it was purchased by Anbang – due to fears of espionage.
Kushner, who is married to Ivanka Trump, stepped down as CEO of the Kusner real estate business when he joined the administration as a key advisor to the President, but the lawmakers said the deal with Arbang, “if codified appears to present a clear conflict of interest for Jared Kushner.”
The lawmakers have also said documents have never been made public which would clarify exactly how Kushner has “separated” from the company.
Calling it a “highly troubling transaction,” the lawmakers pointed to a New York Times story that said Kushner met with Anbang chairman Wu Xiaohui shortly after Trump was elected.
In his former life, Kushner was deeply involved with the 666 Fifth Avenue building, which has become a huge problem for the family business. It was Kushner who led the family to buy the building in 2007 for $1.8 billion, then a record price. It was the first time the Kushners bought an office tower after years of owning and operating residential buildings.
In 2008, the subprime mortgage-driven global financial crisis hit and Kushner’s plans for the building ran into trouble. Four years later, as the building verged on bankruptcy, they sold a 49.5 percent stake to Vornado for $80 million. Vornado in 2012 also purchased the building’s retail space for $707 million.
Vornado is run by Steven Roth, a close friend of Trump’s and co-chair of a committee on Trump’s pet project, infrastructure investment. Roth is also Trump’s partner in two of the Trump Organization’s most valuable buildings.
If the deal with the Chinese had been done, Vornado stood to make a ten-fold return on its investment in 666 Fifth Avenue.
To facilitate the deal with Anbang, the plan was to use the U.S. government’s EB-5 program, which allows a foreign national who invests $500,000 in a deal involving a troubled neighborhood to get the right to live in the U.S. To say 666 Fifth Avenue is a disadvantaged neighborhood would have been a stretch, but that was a key element to the pending business agreement.
As part of the deal, the Kushners were to get a $400 million payment.
“At the very least,” Larry Noble, general counsel for the Campaign Legal Center told Bloomberg, “this raises serious questions about the appearance of a conflict that arises from the possibility that the Kushners are getting a sweetheart deal. A classic way you influence people is by financially helping his family.”
Kushner may have gotten past this situation but like Trump, his life, career, and family are all intertwined in a way that makes future conflicts of interest almost unavoidable.
The situation is made worse because like Trump, Kushner has not been transparent about his separation from his family business, allowing troubling questions to linger about him and his father in law.