Dispatch May 6, 2019

Trump’s Fraught History with Deutsche Bank

Throughout the Trump-Russia saga, one financial institution keeps coming up: Deutsche Bank. Most recently, the German lender became the subject of a lawsuit from the president, as he attempts to block Deutsche Bank from cooperating with congressional subpoenas. The reason that Deutsche Bank plays such a significant role in understanding the story is that the bank has consistently been President Donald Trump’s most reliable lender, financing huge projects even after his multiple bankruptcies when other credible institutions refused lend to him. Combine this with Deutsche Bank’s history of scandals tied to Russian money laundering, and it paints a troubling picture. As investigators continue to examine Trump’s financial dealings and his ties to Russia, Deutsche Bank is one avenue of inquiry that may provide some answers.

Deutsche Bank and Donald Trump

Deutsche Bank began working with Trump in 1998, at a time when traditional lenders refused to work with him. Other large banks reportedly coined the term “the Donald risk” to refer to Trump’s repeated bankruptcies and failure to repay loans. Although Deutsche Bank was repeatedly willing to lend to Trump, the relationship had its share of difficulties. In 2008, after Trump refused to pay back part of a loan he had personally guaranteed, Deutsche Bank sued him to get the $40 million they were owed. Trump sued Deutsche Bank back for $3 billion, claiming that the financial institution helped cause the financial crisis. The two parties eventually settled in 2008, and Deutsche Bank reopened Trump’s line of credit through its private banking section.

Since beginning their initial business relationship, Deutsche Bank has reportedly loaned Trump and his companies more than $2.5 billion, for projects such as Trump World Tower, the Trump International Hotel and Tower in Chicago, and the Trump International Hotel in Washington D.C. As of April 2018, Deutsche Bank held four Trump loans. Trump’s son-in-law Jared Kushner also has a longstanding relationship with Deutsche Bank. According to the Washington Post, he has a personal line of credit “worth up to $25 million” and received a $285 million loan one month before the election as part of a refinancing package for a property owned by Kushner’s real estate company.

Trump continued to request money from Deutsche Bank even as he ran for president, which alarmed the bank’s executives. During the campaign, Trump reportedly requested a loan from Deutsche Bank for his golf course in Scotland. According to The New York Times, Deutsche Bank officials rejected the request, claiming it was too risky to make such a loan to a presidential candidate. Deutsche Bank executives were also reportedly concerned that as Trump prepared to take office in December 2016, he owed nearly $364 million in outstanding debts to the financial institution.

Deutsche Bank and Russia

Deutsche Bank has been operating in Russia for over a century and has been implicated in many Russia-linked money-laundering scandals. These scandals, along with other legal issues outside of its relationship with Russia, have taken a toll: according to Bloomberg, Deutsche Bank “has spent more than $18 billion over the past decade in fines and to settle legal disputes.”

  • Deutsche Bank was implicated in a $10 billion Russian money laundering “mirror-trading” scheme, for which it ultimately paid a combined $630 million in fines to U.S. and U.K. authorities. The scheme involved using Russian rubles to buy blue-chip stock in Russia, and selling that same stock in London in exchange for western currency, thereby moving approximately $10 billion out of Russia. The trades began in 2011 and allegedly benefitted high-profile Russian oligarchs.
  • Deutsche Bank worked with a Latvian bank used in the “Russian Laundromat” money laundering operation that reportedly moved $20 billion out of Russia between 2010 and 2014. The complex operation involved funds that were either “stolen from the government […] or earned through organized crime activity.” Deutsche Bank has not commented publicly about this matter, nor does it appear to be under investigation, but the financial institution did sever ties with the Latvian bank in 2015.
  • Deutsche Bank handled transactions for Denmark’s Danske Bank, which is under investigation for alleged money laundering that reportedly benefited “the Putin family and the FSB.” Between 2007 and 2015, Danske Bank processed $227 billion in suspicious payments through its Estonian branch. Deutsche Bank, which served as a correspondent bank for Danske Bank and funneled money out of Estonia, has denied any wrongdoing and is cooperating with authorities.
  • Deutsche Bank served as a correspondent bank for Troika Dialog, which was once Russia’s largest private investment bank and reportedly moved over $4 billion in funds as part of the “Troika Laundromat” scheme that ran from 2006 to 2013. Deutsche Bank accounts facilitated “more than $889 million” through the Troika Laundromat, according to news reports. In response to these revelations, Deutsche Bank “said it had ‘limited access’ to information about Troika client transactions and couldn’t comment on specific businesses for legal reasons.” The former president of Troika Dialog has denied all allegations of wrongdoing.
  • Deutsche Bank had a correspondent banking relationship with FBME, a Cyprus-based bank that was effectively shut down by the S. Treasury because of money laundering activity. While working with FBME, Deutsche Bank helped process payments linked to powerful and politically-connected Russian individuals. Deutsche Bank was not implicated in FBME’s wrongdoing.

Trump, Deutsche Bank, and the Investigators

Deutsche Bank has been a subject of interest for multiple investigations looking into Trump-Russia connections.

  • In May of 2017, House Democrats asked Deutsche Bank about whether Trump benefitted from the mirror trading scheme and whether any of his loans from Deutsche Bank “were guaranteed by the Russian government, or were in any way connected to Russia.” Deutsche Bank did not respond to the request.
  • More recently, Deutsche Bank confirmed in February 2019 that it had received inquiries from both the House Committee on Financial Services and the House Permanent Select Committee on Intelligence, although the scope of these inquiries remains unclear.
  • Former personal Trump attorney Michael Cohen has also shed some light onto avenues of inquiry around Deutsche Bank and Trump. During his February 2019 testimony before the House Oversight Committee, Cohen was asked whether Trump “ever [provided] inflated assets to a bank in order to obtain a loan,” to which he replied that documents containing inflated numbers “were provided to Deutsche Bank on one occasion […] in our attempt to obtain money so that we can put a bid on the Buffalo Bills.”

Deutsche Bank has always been a sensitive issue for Trump. A recent New York Times article on the subject states, “In a sign of Mr. Trump’s sensitivity to the cache of documents held by Deutsche Bank, he erupted in anger later [in 2017] in response to news reports that Mr. Mueller had subpoenaed his records from the bank. The reports turned out to be inaccurate.” This raises two important questions. Why Mueller didn’t fully investigate the Deutsche Bank connection, given the suspicious fact pattern outlined above. And why was the President so upset about the reports that investigators were looking into his relationship with Deutsche Bank?

Further Resources from the Moscow Project:

Further Reading: