Dec. 23, 2016 3:29 p.m. ET
The Trump Organization has begun unwinding some of the deals that have fueled complaints the far-flung business empire is a minefield of conflicts for the incoming president.
In recent weeks, the company has backed away from a partnership with links to an executive tied to a now-outlawed Georgian militia and a financial-crimes investigation, moved to extricate itself from problematic development contracts and settled high-profile lawsuits.
Four years ago, Donald Trump publicly celebrated his partnership with former Soviet republic of Georgia developer Giorgi Ramishvili. Now his company is trying to end the relationship.
Mr. Ramishvili has missed milestones in its attempts to build a Trump-branded luxury apartment complex in Batumi, a resort city near the Black Sea, and the Trump organization sent him a default notice, a Trump attorney says.
The developer allegedly has a past that makes him a highly unusual—and potentially problematic—partner for a U.S. president, The Wall Street Journal has found. He allegedly was linked with the Mkhedrioni, the now-outlawed militia that thrived in the lawless early years of independence, according to Georgian media reports and two former members of the group. In addition, in 2013, investigators launched a high-profile probe of Mr. Ramishvili and his company, Silk Road Group SA over allegations of money laundering, according to Maya Mtsariashvili, a former Tbilisi chief prosecutor.
Georgian prosecutors didn’t respond to a request for information on whether the 2013 investigation was still active, or had been closed.
Mr. Ramishvili didn’t respond to requests for comment. Silk Road also didn’t reply to requests for comment. Nikoloz Rurua, a former culture minister who is a friend of Mr. Ramishvili from his youth, said the allegations of his involvement with the militia were “bullshit” and were concocted by individuals envious of the businessman’s success.
Mikheil Saakashvili, the former Georgian president, called Mr. Ramishvili a “legitimate businessman.”
The Trump organization also has recently canceled hotel-licensing contracts in Azerbaijan and Brazil and settled litigation involving allegations of fraud at the now-defunct Trump University, which promised it would teach enrollees real-estate investing strategies.
Alan Garten, general counsel for the Trump Organization, said the recent actions were approved by Mr. Trump’s sons, Eric Trump and Donald Trump Jr., without Donald Trump’s involvement. They are part of the normal course of business and don’t reflect a shift in business approach, he said.
In some cases, the actions aren’t related to controversy, rather other business and brand concerns, he said. However, Mr. Garten also said that the company is operating with the understanding it is under more scrutiny now than in the past.
“There’s no question with him taking office the company will be under even a larger microscope,” Mr. Garten said.
Mr. Trump has said that his sons will run his business alongside executives and that the organization won’t venture into new deals, though he hasn’t provided details.
The company still has several licensing deals with overseas partners who have political ties or businesses that overlap heavily with the interests of foreign governments.
Richard Painter, a former ethics attorney for former President George W. Bush who has called on Mr. Trump to sell his assets, said the recent moves were encouraging, but that he still had significant concerns. “It’s certainly smart to try to reduce the number of controversies he has,” Mr. Painter said.
In some cases, some of the Trump Organization’s deals with international partners have been arranged somewhat impromptu, people close to the deals say.
A week before Christmas 2012 in Rio de Janeiro, Donald Trump Jr., flanked by Rio’s mayor, announced the first Trump-branded project in Brazil: a $ 2.5 billion office complex. Trump Towers Rio, a complex of five, 38-floor skyscrapers, was billed in a news release as one of the world’s largest office developments. It was scheduled to be ready for the Summer Olympics in Rio in 2016.
The construction still hasn’t started.
This was also the first foray in Brazil for the developer of the project, Bulgarian-based MRP International. MRP was formed in the early 2000s by two New Zealand entrepreneurs, Richard Macdonald and Myles Summerfield.
MRP was an unlikely developer for a project of this magnitude. Beyond a few shopping malls in Bulgaria and some investments in Croatia and Ukraine, the company had no large-scale projects.
“We didn’t have a track record outside of Europe and we wanted to bolster our image—and what better way than doing a deal with the biggest name in property, Donald Trump?” Mr. Macdonald said in an interview.
But the developers struggled to find investors as the Brazilian economy nose-dived in 2014, Mr. Macdonald said.
Securing the Trump name was easier. MRP paid an upfront branding fee of a few hundred thousand dollars to the Trump Organization, ticked a few boxes on a checklist and sent some drawings of the buildings to a Trump representative, according to a person familiar with the matter.
Mr. Garten said the arrangement was an “exploratory” one and involved only preliminary research from the Trump firm. “They paid for the relationship in exchange for our willingness to explore the opportunity,” Mr. Garten said.
A few weeks ago, The Trump Organization sent Mr. Macdonald a letter informing him the deal was off.
“They revoked the naming rights because of the construction delay, but I assume they had other reasons given how his situation has changed,” Mr. Macdonald said.
Mr. Garten said that the “exploratory” relationship did not give MRP the right to market or sell the project under the Trump name and that it would have expired by its terms February 1, 2017.
In Brazil Mr. Trump’s company also recently canceled a contract with real-estate developer LSH Barra over a different project, a Trump-branded hotel in Rio de Janeiro that recently opened. LSH has been the subject of a corruption probe by Brazil prosecutors. The prosecution documents don’t accuse the Trump Organization of wrongdoing or involvement in potential corruption.
Mr. Garten said that the contract was canceled not due to the probe, but because the hotel didn’t meet Trump brand standards.
A spokesperson for LSH Barra said in statements that the company denies any wrongdoing and is holding a competition to select a new hotel brand. The parting is being done “in a friendly way,” the spokesperson said.
In the former Soviet republic of Georgia, Silk Road Group licensed the Trump name for the high-rise apartment building in Batumi. Messrs. Trump and Mr. Saakashvili, the then-president of Georgia, paid a visit in 2012 to Batumi and inspected the site of the project.
For Mr. Saakashvili, it was an opportunity to promote his country, which had won independence from the Soviet Union in 1991. Mr. Saakashvili wanted to present Georgia as a safe destination for investment after years of civil war, a legacy of entrenched corruption and a disastrous 2008 war with Russia.
“It was a bold move on [Mr. Trump’s] part,” Mr. Saakashvili said, in an interview with The Wall Street Journal. “He saw the success of Georgia, and he cited that Georgia was on the rise.”
More than four years later, the project is incomplete.
Mr. Garten said in an interview this week the Trump group had done due diligence on the developer but that he wasn’t personally aware of allegations that Mr. Ramishvili’s was associated with the Mkhedrioni. The move to cancel the licensing deal wasn’t related to anything about Mr. Ramishvili, Mr. Garten said.
“Extensive diligence was done on this deal before we entered into it,” Mr. Garten said.
The Trump organization also recently canceled a licensing deal with an Azerbaijan company that has netted the company at least $ 2.5 million since the beginning of 2014, according to Mr. Trump’s disclosure forms with the Federal Election Commission.
The developer in that project, Anar Mammadov , the son of the country’s transportation minister, has been the subject of several media reports—including by the Associated Press—that raise allegations of corruption, referencing information contained in the WikiLeaks cables. Mr. Mammadov didn’t respond to request for comment.
One diplomatic cable said the minister’s “immediate family owns Azerbaijan’s largest commercial development company and he is notoriously corrupt even for Azerbaijan.”
Mr. Garten said the company was ending the contract because it hasn’t been hitting certain contractual milestones, but that the media reports were also a concern.
“Obviously I read the papers just like everyone else,” Mr. Garten said. “I understand what the discussion is and what concerns are being raised. I can’t exercise termination rights based on just concerns.”