Court grants permission for judicial review into Unexplained Wealth Order against Donald Trump
Legal efforts to force Scottish ministers to scrutinise the financing of Donald Trump’s golf and hotel resorts have overcome a significant hurdle, after the Court of Session granted permission for campaigners to seek a judicial review of the Scottish Government’s position.
Avaaz, a US-based non-profit activism organisation, petitioned Scotland’s highest court after MSPs rejected calls to pursue an Unexplained Wealth Order (UWO) against the former US president’s Scottish firms.
The government has said that any decision to apply for a UWO is a matter for ministers, with the Civil Recovery Unit (CRU) handling any applications to the courts in practice.
But Avaaz, backed by a cross-party group of opposition MSPs, argued that ministers have a duty to seek a UWO where the relevant requirements under the Proceeds of Crime Act 2002 are met.
Its petition to the court stated that there are “no reasonable grounds” to suspect that known sources of lawfully obtained income would have been sufficient to bankroll Mr Trump’s acquisition of his Scottish properties.
Now, Lord Sandison has given the green light for Avaaz to seek a judicial review, a development which will reignite the debate over how Mr Trump acquired his Scottish resorts during a decade-long spending spree.
Nick Flynn, legal director at Avaaz, said the judgement would help seek answers about Mr Trump’s purchase of Turnberry.
“Today’s win means Scottish ministers will now be challenged in court over their ongoing failure to seek an UWO to investigate Trump's suspicious Turnberry purchase,” he said.
"Armed with a proper understanding of the law, we hope that ministers agree that Trump’s purchase demands the transparency that only a UWO can bring.
"Ministers have been turning a blind eye to the cloud of suspicion hanging over Trump Turnberry for far too long.”
Scottish Greens co-leader Patrick Harvie, who brought the UWO motion to Holyrood in February, said the decision represented a “step forward” in an issue where Scotland’s reputation was “at stake.”
UWOs are rarely used civil powers which allow authorities to target suspected corrupt foreign officials who have potentially laundered stolen money through the UK.
The mechanism is designed to force the owners of assets to disclose their wealth. If an official, or their family, cannot prove a legitimate source for their riches, authorities can go to court to seize the property.
At a previous permission hearing last month, Lord Sandison explained that the substantive issues raised by Avaaz’s petition passed the test set out in the statute, and that the purpose of the hearing was to determine whether a three month time limit should be extended to allow the proceedings to be brought.
Kay Springham QC, representing Avaz, said there would be substantial prejudice to the public interest if the court refused the petition, and that there were “real and substantial concerns” surrounding the Trump Organisation’s finances.
But Ruth Crawford QC, appearing for the Scottish Government said it was important to distinguish between “what is in the public interest and what interests the public.”
In his ruling, Lord Sandison said that having taken into account the “general and continuing public importance” of the legal questions raised by Avaaz, it was “in the interests of justice” to extend the time limit for lodging its petition. He granted permission for the petition to proceed without condition or restriction.
Neither the government nor the CRU has confirmed or denied the existence of any ongoing investigation into Mr Trump or his Scottish businesses.
Welcoming the judgement, Mr Harvie said: “It should never have got to the stage of a legal challenge from an NGO for the Scottish Government to confirm or deny whether they will seek a ‘McMafia’ order.
“Scotland’s reputation is at stake, and it is entirely within the powers of ministers to defend it. An UWO would be a clear signal that business in Scotland must be transparent and accountable, no matter the individual involved.”
Questions over how Mr Trump financed his Scottish resorts have circulated for years.
In 2008, Iain Webster, a corporate financier hired by the Trump Organisation, told authorities in Aberdeenshire that Mr Trump planned to invest up £12m of his own money in what would become the Trump Scotland resort, and use its equity value to borrow further money.
That same year, Mr Trump tried and failed to purchase Hamilton Hall in St Andrews, which he envisaged turning into a hotel.
He offered to buy the building from the Bank of Scotland for £23m on condition it provided him with loans worth £38. The bank refused.
In the years since, Mr Trump has repeatedly said that his acquisition and development of the Trump Organisation’s Scottish properties did not require external financing.
But those questions intensified in 2014 when he purchased Turnberry in a £35.7m cash deal.
Since incorporating his first Scottish company 16 years ago, none of Mr Trump’s companies have turned a profit, and consequently, have yet to pay a penny in corporation tax.
According to filings at Companies House, the various entities have run up losses of £55m under Mr Trump’s watch, and owe in the region of £157m to US-based limited liability companies and trusts in his name. Two of the Trump Organisation’s smaller subsidiary firms in Scotland been wound up.
Efforts to expand the Turnberry resort with hundreds of houses been thwarted so far by planners, while in the north east, Mr Trump’s firm has had plans approved for up to 500 new houses. Nearly two years on, it has yet to complete a single dwelling.
Last month, Allen Weisselberg, a longstanding Trump Organisation senior executive, was charged by US prosecutors with concealing £1.2m worth of income. The 73-year-old has pleaded not guilty to tax fraud.
He was subsequently terminated as a director of Trump International Golf Club Scotland, but is still listed as a person with “significant control” over Golf Recreation Scotland, the parent company at Turnberry.
The Trump Organisation has been contacted for comment.
A message from the editor:
Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.
Want to join the conversation? Please or to comment on this article.