If under-reported deal last year was an attempt by Tokyo to buy influence inside the White House, it appears to have failed
26 March 2018 | Peter J. Brown | Asia Times
“You could call it “Japanese Prime Minister Shinzo Abe and the tale of two real-estate deals.”
At home, Abe appears to be doing everything he can to hold onto power by fending off and defusing the opposition’s campaign to bring clarity to a series of disturbing and perhaps corrupt practices surrounding the involvement – or entanglement – of Abe’s wife in a government land sale for a new school which listed her as honorary principal.
As witnesses are summoned to appear before the Diet and altered documents are identified, public opinion polls suggest Abe is becoming more unpopular by the day due to the alleged ties between his wife and Osaka-based school operator, Moritomo Gakuen.
The PM and his cabinet are under siege, especially since the Finance Ministry’s release of altered documents was revealed.
Abe’s firm denial of any wrongdoing is holding up – for now. But could his government go down in flames because of the land sale? This outcome cannot be ruled out.
On the other hand, media coverage of Japanese government’s involvement in another large real estate deal linked to the Kushner property empire in New York has raised eyebrows, but has not yet sparked calls for an investigation.
23% stake in Brooklyn building
The deal, which took shape over a year ago, suddenly surfaced in mid-March when Bloomberg began to raise questions about a decision by a subsidiary of Nippon Telegraph & Telephone Corp – NTT Urban Development – to establish financial ties with the Kushner Companies and purchase a 23% stake in a building in Brooklyn, New York.
Because the Japanese government owns approximately a third of NTT, and because this deal was made shortly after Abe’s surprise meeting with US President Donald Trump in Trump Tower in New York shortly after he was elected, it cannot be dismissed or discounted.
Abe was the first foreign leader to sit down with Trump after the latter’s victory in November 2016, and Jared Kushner was present at this same meeting. While there are hints of a potential conflict of interest, no direct allegation has been made that this infusion of over US$100 million represents an attempt by Abe and the Liberal Democratic Party to purchase influence with the Trump administration.
To be clear, Normandy Real Estate Partners, a New Jersey-based investment firm, is listed as the buyer of record. Under the deal, NTTUD acquired a 15% common equity interest in Normandy, according to a company press release. More importantly, although Kushner derives income from Kushner Cos, he has no active management role in it since he became a senior advisor to his father-in-law, President Trump.
“The alliance will expand both organizations’ growth initiatives in real estate investment in Normandy’s target markets of New York City, Boston and Washington DC,” the release stated. “Our goal when we first started looking at the US market in 2013 was to identify a best-in-class real estate operator, and we chose Normandy based on their strong track record and local expertise,” said Hideyuki Yamasawa, executive vice president of NTT Urban’s Global Business Department. “Following our initial co-investment in Normandy Real Estate Fund III’s 119 W. 25th Street project, we have made a total of five co-investments. With these successful investments, we have now decided to expand the relationship.”
“Japanese investors are expected to be a growing and important source of equity capital targeting real estate investment in the US,” said Finn Wentworth, a founder and partner at Normandy Real Estate Partners. “Our affiliation with NTTUD will leave us strategically well positioned for future growth.”
Kushner’s status undiminished
Widespread media coverage of Jared Kushner’s role as a senior White House adviser has included discussion of Kushner’s inability to obtain a security clearance. Given that constraint, his effectiveness in his current capacity as one of Trump’s inner circle of advisors has been called into question.
Even so, Kushner could be seen sitting at the table with other key members of the Trump administration as President Trump welcomed Saudi Arabia’s Crown Prince Mohammed bin Salman to the White House on March 20, for example, when it was divulged that Saudi Arabia was considering billions of dollars in additional arms purchases and investments in the US.
So, it is clear that Kushner’s status in the White House has not diminished.
Of course, a partial stake in a Brooklyn building obtained by a unit of a Japanese company whose largest shareholder is the government of Japan is simply another element in the complex structure of the Kushner real-estate empire.
There are no calls for greater transparency emanating from Washington or Tokyo as a result.
Nonetheless, Bloomberg’s coverage points to the significance of this deal, describing it as an enabling factor in the Kushner group acquisition of “larger ownership stakes in nearby buildings in Brooklyn’s chic Dumbo neighborhood.” NTTUD’s role with Kushner Cos is not linked to ongoing probes being undertaken both by investigators for New York State as well as NYC’s Department of Buildings.
Bloomberg reports that while Kushner Cos retains an interest in more than 60 buildings in NYC, they do not own a majority stake in many of those properties and that nearly half involve a Kushner Cos ownership stake of less than 20%.
Foreign investors from across the globe do deals with Kushner Cos, and these deals will continue to draw scrutiny. For example, Representative Ted Lieu, a Democrat from California, is one of over a dozen members of the US Congress to recently ask Kushner if, as a White House advisor, he asked foreign nationals to finance a very costly property on Fifth Ave owned by Kushner Cos.
Outside the White House inner circle
But let us return to Abe and Japan. It is germane to question how he and it have fared since the 2017 trip when Abe flew on Air Force One with President Trump and Kushner to Mar-a-Lago in Florida. At the time, Abe appeared to be a key figure in President Trump’s grand campaign to woo foreign leaders and build effective coalitions to deal with North Korea and Iran.
The fact that the Trump administration excluded Japan from the list of six countries which were not impacted by his recent implementation of tariffs on steel and aluminum imports to the US suggests that if Tokyo’s intention was to buy influence inside the White House, the sum was not well spent. At the same time, Japan did not appear on the list of four countries recently identified as perhaps possessing information which could be used to influence Jared Kushner.
As of now, Abe appears to be well outside the inner circle as far as White House decision-making is concerned. No building in Brooklyn will change this.