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Funding for Trump hotel traces back to Russian bank

Charles Rex Arbogast / AP

Alexander Shnaider, a Russian-Canadian developer who partnered with Trump to build the Trump International Hotel and Tower in Toronto, used hundreds of millions of dollars that can be traced back to Vnesheconombank (VEB), a Russian government-run bank under investigation in the U.S., to help finance the project, reports the WSJ.

Why this matters: A Trump Organization spokesman told the WSJ that the company had no financial dealings with VEB. Trump has also repeatedly stated that he has no ties to Russia. Meanwhile, federal investigators are looking into the links between Trump's staff and Russian financial institutions. This all comes as Trump has been under fire for sharing Israeli intelligence with top Russian officials.

The breakdown:

  1. Midland Resources, a holding company then owned by Shnaider and a partner, acquired a stake in Zaporizhstal, a Ukranian steel mill, for roughly $70 million after the collapse of the Soviet Union.
  2. In 2010, Shnaider and his partner sold Midland Resources' stake in the steel mill for roughly $850 million to an unnamed buyer, who used funds from VEB to make the purchase.Midland Resources transferred ownership of its share to the unknown investor through 5 offshore companies"Two people with knowledge of the deal" told the WSJ that the buyer was "an entity acting for the Russian government" and that VEB initiated the sell and financed the purchase.
  3. Shnaider, now hundreds of millions of dollars richer, used about $15 million to help finance The Trump Toronto Hotel, which in turn paid licensing fees to Donald Trump.

The Putin link: At the time Shnaider sold his stake in the steelmaker, Vladimir Putin was serving as the chairman of VEB's supervisory board. As the WSJ points out, any major deals would have needed his approval first. The U.S. later sanctioned the bank after Russia invaded Ukraine and occupied Crimea in 2014.

The Jared Kushner link: Trump's son-in-law met with VEB's chairman in December. Sean Spicer said Kushner was simply fulfilling his role as the "primary point of contact with foreign government officials."