So Ahmadinejad’s Your Client …
Dana Rubinstein Dec. 1, 2009, 5:01 p.m.
What’s a broker to do when he finds himself in the pay of Tehran?
That’s the question now facing real estate brokerage Jones Lang LaSalle, following the revelation that a skyscraper in New York’s most exclusive office market belongs to a shell company that, in turn, belongs to the Iranian regime, according to a Nov. 12 complaint filed by the U.S. attorney for the Southern District.
Jones Lang LaSalle, you see, handles the leasing for the building, 650 Fifth Avenue, according to real estate database CoStar. And Jones Lang LaSalle, which declined to comment for this story, has not denied it. (It should be noted, the building’s provenance has been an open secret in New York real estate for decades. “I remember, in ’79, thinking to myself, ‘Gosh, what’s going to happen now that the Revolutionary Guard owns the building?’” recalled Ira Schuman, an executive vice president at Studley, referring to the overthrow of the Shah that year.)
This raises a couple of prickly questions that it seems most real estate professionals would rather avoid. Namely, in what circumstances should a broker decline to take a client’s money? And, does this constitute such a situation?
We are, after all, talking about a regime that has been all over the press in recent months for, among other things, a highly contested election that reinstalled Mahmoud Ahmadinejad; violence against those who protested the election; and the imprisonment and torture of intellectuals and dissidents. Most recently, Iran has announced the expansion of nuclear activities, prompting even Russia to call for renewed sanctions.
This is not the first time these sorts of questions have arisen in New York real estate, which is home to the United Nations. Indeed, brokers routinely represent countries in their searches for real estate in which to house their New York consulates and U.N. missions.
NAI Global executive managing director Gil Robinov, for one, personally helped North Korea find its current U.N. Mission at 820 Second Avenue.
“I’m not happy to represent some of them, like Iran and North Korea, which the U.S. doesn’t always have friendly relations with,” Mr. Robinov said. “But I feel like I have a responsibility, as an American and as a broker in New York, to help these people.”
“They’re supposed to be in New York, they are members of the United Nations, and we’re the host city.”
But the property in question, 650 Fifth Avenue, serves not a diplomatic purpose, but a purely business one.
Mr. Robinov isn’t sure he’d work under those circumstances. “It’s one thing to handle a transaction one time, but if you’re an agent for a building, then you really have to be involved with them, reporting to them, you’re part of the family. And I don’t think I could be a part of that family.”
Some agents don’t share Mr. Robinov’s sentiments.
“That’s a tough question,” said one real estate broker. “I’m very pro-American, but I’m not overly political, and I do like to make a living. If they’re not asking you to do anything illegal, then you’re just doing your job.”
Especially if said “job” is on Fifth Avenue at 52nd Street, within the so-called Plaza district, which commands the highest office rents in New York City.
“Might someone be willing to not get involved if it were on 26th Street between Sixth and Seventh avenues?” the broker continued. “Yeah, they might say, ‘I’m not getting involved with this fucking government.’ But this is about the money.”
Not everyone is so pragmatic.
Eric Michael Anton, a principal at brokerage Eastern Consolidated, has twice refused to work with foreign governments whose politics weren’t to his liking.
“I once had the opportunity to work with Sudan, which was looking to buy or rent space for their mission, and at the time they were on the terrorist watch list,” Mr. Anton said. “And my boss at the time and I decided we didn’t want to work with them. We did the same thing with Syria. Money is nice, but it’s definitely not the only consideration on the planet.”
In the 1980s, the late Seymour Durst made a similar ethical calculation when he was assembling land in Times Square to build the Condé Nast tower, nixing a purchase from the Bernstein family because of reports of their longtime involvement with Philippines dictator Ferdinand Marcos. Interesting side note: The Marcoses’ New York investments included the Crown Building on Fifth Avenue, which was later sold in bankruptcy to Eliot Spitzer’s dad, Bernie.
Needless to say, these ethical quandaries are not limited to the real estate business (and Jones Lang LaSalle is not the first servicer to get mixed up with the internationally unsavory).
“Very early on, a group came to me that was doing government relations for a company selling fighter jets to Saudi Arabia, and they wanted a PR firm,” recalled George Arzt, of George Arzt Communications. “And I looked at my associate and I said, ‘No way, no way I’m going to do this.’ Because it was anathema to the defense of Israel, and it was a big deal in Congress at the time, the sale of the fighter jets. And I said, it is not worth the headaches, no matter what you get paid, plus I’d like to go to a synagogue on High Holy Days. In the same way, if you’re doing work for a company that is doing business [for] Iran, you have to look at the consequences. Is it worth it?”