Complex holdings, under scrutiny
The failure to divest his Invesco stock in accordance with the terms of his ethics agreement is the latest in a series of questions about the billionaire commerce secretary’s personal finances. The situation has prompted U.S. senators to call for answers and watchdog groups to request investigations.
Newly released documents obtained by the Center for Public Integrity via a Freedom of Information Act lawsuit against the Office of Government Ethics and the Commerce Department reinforce that Ross’ ethics agreement was complex. The question of which assets Ross would be required to divest and how quickly was the subject of negotiation between his lawyers and government ethics officials.
One January 2017 analysis prepared by Commerce Department lawyers envisioned Ross retaining a long list of his financial holdings across multiple sectors — aircraft leasing, banking, financial services, construction, oil and gas, railroads and shipping among them.
“As explained below, ethics officials at the U.S. Department of Commerce have determined that such disqualifications will not materially limit Mr. Ross’s ability to perform the duties of Secretary of Commerce for the reasons stated,” the document said.
But not everyone agrees.
“This analysis starts off with, ‘Here’s everything I’m going to keep,’ as opposed to, ‘Here’s everything I am going to divest,’ since as secretary of commerce, there isn’t much in the U.S. economy that you don’t touch directly or have influence over,” said Don Fox, a former head of the Office of Government Ethics.
“It doesn’t seem very thorough,” said Kathleen Clark, a professor of law at Washington University in St. Louis and an expert on government ethics.
Norman Eisen, chief ethics lawyer during the Obama administration, said the Commerce Department lawyers in the analysis “took a too narrow view of the potential for conflicts of interest” and relied too heavily on recusals to resolve any possible issues.
“In my experience, an ethics office would normally recommend a more conservative approach requiring divestiture of assets that present the potential for conflicts of interest,” he said. “While other commerce secretaries may have been permitted to keep certain assets, the recusal requirement would be as narrow as possible.”
Eisen leads the board of Citizens for Responsibility and Ethics in Washington, which has filed complaints against Ross regarding his handling of conflicts and divestments.
Officials at the Office of Government Ethics appear to have pushed for more divestment than envisioned by the Commerce Department lawyers’ analysis, because Ross’ final ethics agreement required him to divest most of those assets — although Ross’ lawyers wanted him to have a more generous time frame to do so.
Ross “would like a simple 180 day rule covering all divestitures. He sees the effort as an integrated whole, a massive restructuring and disposition of his business and personal financial life. He came away from the discussion last night with that in mind. Can we make that work?” Ross’ lawyer, Kassinger, wrote to ethics officials in January 2017.
Walter Shaub, then the head of the Office of Government Ethics, told Kassinger that readily marketable assets should be sold within 90 days.
The ultimate agreement gave Ross 90 days to sell many of his assets and 180 days on others. Some, such as Ross’ shipping company holdings, he was permitted to retain.
Those have been controversial.
The New York Times and the International Consortium of Investigative Journalists last year wrote about Ross’ holdings in a shipping firm, Navigator, whose clients included a Russian energy company with links to the Kremlin. Last month, Forbes reported that Ross, after receiving reporters’ inquiries about Navigator, shorted Navigator stock. The maneuver placed Ross in a position to make money if the stock dropped.
In a statement to The New York Times, Ross said he shorted the Navigator stock in an effort to speed up divestment after discovering shares in the company he didn’t know he owned.
Ross’ stake in another shipping company, Diamond S Shipping Group Inc., was the subject of a Center for Public Integrity investigation last year. Most of the company’s fleet of medium-range tanker vessels sail under Chinese flags, and the company has ties to a major Chinese investment fund.
Ross said many assets, including his shipping holdings, were divested into a trust in which neither he nor his wife has any financial interest.
This week, Ross told CNBC he had executed short sales of other stocks after realizing he possessed stakes he had not previously realized he owned.
Ross has been one of the Trump administration’s leading negotiators on trade with China, and has made multiple trips to the country since assuming his position as commerce secretary.
In response to questions during his Senate confirmation hearing about potential conflicts of interests, Ross told senators: “I intend to be quite scrupulous about recusal” if there is “the slightest scintilla of doubt.”
At least one senator is now questioning whether Ross has kept that promise.
“Secretary Ross promised that he would step back from issues where he had a personal financial interest,” Sen. Ron Wyden, an Oregon Democrat who serves as the ranking member of the Senate Finance Committee, said in a statement to the Center for Public Integrity. “Based on his ethics filings, it’s hard to see how he could have kept his promise given his close involvement in trade negotiations. Secretary Ross has a lot of explaining to do to the American people.”
Rachel Leven contributed to this article.
FROM THE ARCHIVES:
Wilbur Ross will shepherd Trump’s trade policy. Should he also own a shipping firm?
Commerce Secretary Wilbur Ross sells shipping investment