Wargaming: From Tanks to Banks, The Untold Financial Story (Part III.V of IV)
Part III.V: Kaiser Don, the Money Laundering Con
In Part III.V, we will discuss how Donald Trump might find himself entangled in the mess going on at the banks in Cyprus and their links to Russian money laundering, along with what might happen to Cyprus if they don’t make the changes necessary to their banking system. This is an augmented section continued from Part III, due to it running a little long.
What we know one year into president Trump’s first, and hopefully last term, is that he is a clown. A very wealthy clown. A very wealthy clown with a hot wife, beautiful daughter, and a really bad golf game. I’m willing to bet he plays more golf than Tiger Woods. He loves to live large and in order to do that, he has to borrow a lot of money. US banks have stopped lending him money though, because he has a nasty habit of not paying them back by going bankrupt, trying to change the terms of the loan, or daring you to sue him to get your money back and living up to contracts he agrees to. He screws over a lot of people who he owes money to. Just read some of these stories. What a great person we have as president. He is also a confessed pussy grabber.
He is a deadbeat, and legitimate banks won’t lend him any money. So, where does a deadbeat go when they need a loan? Yep… You frigging guessed it, “Treasure Island.” That’s right, that shitty little island in the middle of f*cking nowhere strikes again. Cyprus!
After years of bad business decisions, foreclosures and bankruptcies, not to mention the financial crisis of 2007-2008, Trump found himself in the hole. He was under water and needed a bailout. He screwed over so many US banks that they wouldn’t lend him money anymore, so he looked for some low dangling fruit and found some wealthy Russians who wanted to clean some money. Trumps son Eric made this clear in an interview:
“We don’t rely on American banks,” Dodson said Trump told him. “We have all the funding we need out of Russia.” (Eric Trump later denied he made this claim.) Years earlier, at a real estate conference in 2008, Donald Trump Jr. said, “Russians make up a pretty disproportionate cross-section of a lot of our assets.” He later added, “We see a lot of money pouring in from Russia.”
Trump owes a lot of money to Deutsche Bank (around 130 million). Yes, the same bank that was fined for not preventing money laundering and allowing a trading scheme.
Where there is smoke there is fire, but winning a case for money laundering is difficult. There is a low prosecution rate, because there is always plausible deniability, and Trump can always blame one of his sales people or managers. A typical real estate money laundering operation would involve cash transactions, which is harder to trace and people wanting to clean money would, for example, buy condo units or other real estate, and then sell those units to complete the cleaning of their money to the country they want it in. Like this example of one of Trumps deals:
Can Trump be linked to money laundering by the Mueller investigation?
Trump has a lot of people working for him, and a lot of lawyers. Let’s face it, the odds of him being directly connected to money laundering are slim. What is most likely to happen is he will be found guilty of lying about something, tax evasion or some other collusion with the Russians. Russia wants the sanctions lifted and Trump stands to lose nothing by removing those sanctions. He might be forgiven his Russian loans if he does. One of the contracts Russia is hoping to gain after sanctions are lifted is a one billion dollar deal with Exxon-Mobil that was put on hold after sanctions were imposed.
I wonder who helped negotiate this huge deal as the CEO of Exxon-Mobile in 2013?
Drum roll please…
Current United States Secretary of State Rex Tillerson. Wow, what a surprise.
Rex is also very popular in Russia, as he was given one of the highest honors Russia gives to foreigners, the prestigious Order of Friendship. What a gem.
With friends like this, who needs enemies?
Let us take a brief look at Paul Manafort. Trumps political advisor during his campaign who is current under house arrest for conspiracy against the United States. Paul has a habit of helping anyone win elections, regardless of what country they are from or if they are dictators or murderers. He doesn’t care. If they can pay, he will do services for them. He also has a lot of companies that he creates that purportedly get money from sources disguised as loans, which are actual payments, thereby avoiding income tax. This is a big no-no. This sends people to jail for a long time. He also likes to spend his spare time cleaning money.
“According to the prosecutors, Manafort laundered more than $18 million.”
What will happen to Cyprus if they don’t change their money laundering ways?
As we read in Part I of this series, Cyprus has a lot of Russians doing business there for various reasons. There are better tax rates, more free markets, and less sanctions than in Russia. The island doesn’t give two shits about where the money comes from though, because the island benefits from the dirty money. It pretends to be strict and then plays stupid when the EU pressures them into reforms, but in reality, they will keep up this charade as long as they can get away with it.
The EU is applying pressure due to recent scandals and the 2009 death of whistle blower and tax accountant Sergei Magnitski, and soon the party could be over. Magnitski apparently uncovered Russian corruption and a money laundering scheme in Cyprus and was jailed and died suspiciously eight days before his trial.
“Reporters learned that Magnitsky had complained of worsening stomach pain for five days prior to his death and that by the 15th, he was vomiting every three hours, and had a visibly swollen stomach. On the day of his death, the prison physician, believing Magnitsky had a chronic disease, sent him by ambulance to and later transferred him to Matrosskava Tishina prison’s medical unit, which was equipped to help him. But the surgeon there—who described Magnitsky as “agitated, trying to hide behind a bag and saying people were trying to kill him”—prescribed only a painkiller, and left him to receive a psychiatric evaluation. Magnitsky was found dead in his cell a little over two hours later.”
Since Magnitski’s death, the Magnitski Act was passed, which has the purpose of punishing the people believed to be responsible for his death, and not permitting them to enter the United States or using their banking system. Trump and the Russians are believed to be trying to reverse or alter this act.
The recent change in IFRS 9 Financial Instruments reporting standards for public companies in the EU seems to be directly aimed at Cyprus and other countries with ties to money laundering. As described in Part III, this reporting standard will force the issue of bad debt and will mostly affect banks. The reason is all bad debt will have to be assessed in 2018 for its actual loss or impairment, and recorded as such. This is making banks in Cyprus, including our beloved Hellenic Bank, scramble to hide bad debt in increasingly suspicious ways. The shell game cannot go on forever, and the next logical step is a raid on the bank’s financial records. If and when this happens, another financial crisis will ensue which might cause this tiny, little shit island in the middle of nowhere to go belly up.
So, what will happen in the near future to Trump, Manafort, and Cyprus?
Trump wants the investigation over with quickly and there is a reason for that. Impeachment requires fifty percent vote in the House and two thirds in the Senate. Republicans currently control both the House and Senate, but if the 2018 elections bring in more Democratic seats due to this unpopular president, then the risk of impeachment increases. He most likely gave Mueller a deadline somewhere around June or July for the investigation to end.
What is likely to happen?
If the investigation does not end by the deadline, Mueller will be fired for stalling and Trump will claim it is political and he is dragging his feet. I believe Mueller has a 75% chance of being fired because the investigation most likely will not end by then.
If Mueller does end the investigation by then and criminal charges go against anyone in the Trump campaign or family, they will be pardoned.
If Mueller has information on treason, lying under oath or tax evasion, Trump might be impeached or jailed, but the odds of this are slim.
What will happen to Manafort and Steve Bannon?
Manafort is currently under house arrest and Steve Bannon is unemployed and on the surface, seems at odds with the president following the release of the tell all book “Fire and Fury.” I believe Bannon is trying to gain immunity for testimony, where he will then lie about what he knows and give the president a shiny endorsement. If Manafort and many people in Trump’s inner circle have ties to Russia, including his son-in-law Jared Kushner, they all are most likely involved in shady deals and money laundering, and possibly tax evasion as well. If Bannon is involved, he would want immunity. It is possible Bannon knows they investigated his finances and Mueller has some dirt. If anyone in Trump’s inner circle is indicted, they will be pardoned, but state charges cannot be pardoned, although Trump could apply political pressure for the charges to be dropped.
The sad reality…
At the end of the day we most likely we all have to deal with this buffoon until his term is over. It really is shitty feeling, but he was smart enough to get enough people to vote for him. You have to give him credit for that. In terms of Cyprus, there most likely will be some sort of backroom deal between the EU and Russia where Russia props up the banks and agrees to be more accountable and then they will pick a new island or location to switch the money laundering operations to.
In the series finale Part IV of IV: “Going Belly Up,” we will attempt to construct a 2017 income statement for Wargaming. We will use whatever information that is public and put together estimates for unknown information. What conclusions could be drawn from this? We shall find out, but with all the recent changes within the company, it appears there is a crisis going on at Wargaming.
Disclaimer: My name is John Smith but you can call me Bubba. Everything I have said and will say in this series is only my opinion and is for entertainment purposes only. My current location is on a small boat docked next to a small island (not Cyprus) in a yet undiscovered island chain which lies in a large body of water.