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Indian-origin family’s hotel chain linked to Trump faces tax break scrutiny

If the tax rebate is approved for the Chawlas, it could indirectly, but personally, benefit President Donald Trump.

world Updated: Feb 11, 2018 21:41 IST
HT Correspondent
HT Correspondent
Hindustan Times, Washington
Chawla Hotels,Suresh Chawla,Dinesh Chawla
Suresh Chawla (left) of Chawla Hotels and Eric Danziger, CEO of Trump Hotels in New York, at a launch event for four new Trump hotels being built in Mississippi. (AP File)

A Mississippi hotel chain owned by an Indian-origin family is facing media scrutiny for tax breaks worth millions of dollars that it had sought for an upcoming project in partnership with the Trump Organization, now run by President Donald Trump’s sons Donald Trump Jr and Eric Trump.

Chawla Hotels, owned by brothers Dinesh Chawla and Suresh Chawla, had applied for local tax rebates worth $6 million, which is roughly a third of an estimated $20 mn the hotel in Cleveland, Mississippi, is likely to cost, according to multiple news reports, which the group has not contested.

There was no response to an email sent to an address mentioned on the company’s corporate website, but Dinesh Chawla, the CEO, has confirmed to The New York Times and Associated Press that the company had indeed sought tax rebates under the state’s tourism promotion scheme for the hotel.

He also told The Times that the Trump Organization played no role in the rebate application that the company had first considered in 2015.

But, the New York Times said citing critics and legal experts,“if the state approves the tax rebate for the Chawlas, it could indirectly, but personally, benefit the president, who owns the family business through a trust, an arrangement that raises some constitutional concerns.”

The hotel is among the first projects selected for partnership with the Trump Organization’s newly launched Scion brand for four-star hotels.

The impact of Trump’s election on his businesses have long been a subject of intense media scrutiny and the president has distanced himself from them, setting up a trust to run with the help of his two sons.

The Chawlas first came in touch with the Trumps when VK Chawla, an immigrant from India, reached out to Trump the businessman in 1988, asking for a loan to expand his business, after being turned down by 50 banks.

Trump called back, according to accounts related by the family in news reports, and suggested Chawla should apply for a loan for minority communities. He did, and with a loan of $450,000, the elder Chawla started a hotel chain that now has 17 properties in the Mississippi Delta region.

The chain was picked up as the first partners of the Trump Organization’s newly launched brands Scion and American Idea in June 2017, that would include three properties to be managed by the Trump group.

First Published: Feb 11, 2018 21:40 IST