As commerce secretary, Wilbur Ross has met with auto executives who are customers of the company he founded and still had a financial interest in.
He has met with the chief executive of a rail car manufacturer whose board he once sat on and whose shares he still owned.
And according to a Forbes magazine article, even though he owned a $10 million to $50 million stake in the financial firm Invesco, where he had worked, he met with a board member of the Qatar Investment Authority, a sovereign wealth fund that had given Ross’s former firm money to manage.
The meetings — first reported by Forbes and confirmed via regulatory disclosures, Commerce Department officials and one of the firms involved — and financial holdings have put Ross under increasing scrutiny from government ethics watchdogs and lawmakers. Ross has denied any wrongdoing — saying he only made “inadvertent errors” — and his lawyer says a commerce secretary must be able to meet with industry officials to do his job.
But last month, the Office of Government Ethics (OGE), an independent agency created 40 years ago to ensure ethical behavior in the executive branch, scolded Ross for how he has managed his investments after coming into office. The OGE rebuked him for not selling certain holdings — including the Invesco stock — in the timely manner described in the agreement he forged with OGE upon taking office.
Such failures “can undermine public trust in you and the overall ethics program.” Although it did not recommend any punishment, the ethics office’s acting director wrote: “Your failure to divest created the potential for a serious criminal violation on your part and undermined public confidence.”
Lawmakers, meanwhile, are asking whether the late sales turned ordinary meetings into occasions for conflicts — or at least the appearance of conflicts — of interest.
Senate Commerce Committee Chairman John Thune (R-S.D.) asked the Commerce Department’s inspector general on July 15 to review whether “errors” Ross made resulted “in a violation of conflict of interest law.” Sen. Ron Wyden (Ore.), the ranking Democrat on the Senate Finance Committee, asked Attorney General Jeff Sessions to review Ross’s disclosures for “potential criminal violations.”
Outside groups also have raised concerns. On Aug. 10, the nonprofit group Democracy 21 filed a complaint with the Justice Department’s Public Integrity Section asking it to investigate Ross. And on Aug. 13, the Campaign Legal Center, another watchdog group, filed a complaint with the Commerce Department’s inspector general asking for an inquiry.
The commerce inspector general is reviewing the allegations against Ross, but would not comment further on an open matter, said Clark Reid, legislative and external affairs officer.
“The best thing you can say about his tenure from an ethics standpoint is it’s completely tone deaf,” said Don Fox, former acting director and general counsel at the OGE. “And the worst we won’t know until the inspector general finishes its work.”
Ross, who has estimated his worth to be $800 million, has said that he has done nothing to directly affect his own interests. His ethics agreement with OGE permitted him to keep some private equity stakes that were difficult to liquidate and that posed only a “remote” chance of a conflict.
Theodore W. Kassinger, a partner at O’Melveny & Myers who was general counsel of commerce under President George W. Bush and who is representing Ross, said the meetings did not pose any conflicts of interest.
“Secretary Ross has not violated any conflict of interest law or regulation,” Kassinger said. “He has not participated personally and substantially in, nor taken any action in regard to a particular matter that would have had a direct and predictable effect on his financial investments.”
Kassinger added, “He continues to follow the guidance of Commerce Department ethics officials regarding the matters in which he is personally involved. He has divested a very substantial part of the investments he held when he assumed the office of secretary, and he has pledged to divest other remaining holdings even though he is not obligated to do so.”
This month, Ross must file another disclosure statement to the government ethics office. One person familiar with the preparations, speaking on the condition of anonymity to describe a document before its official release, says he expects no surprises.
The companies appear to have little to show for their relationships with Ross. Steel and aluminum tariffs, as well as the threat of gutting the North American Free Trade Agreement, fly in the face of the interests of most of those companies.
Forbes magazine, using Ross’s calendar entries, recently wrote about Ross’s meetings with top executives and potential conflicts. The Commerce Department did not release copies of Ross’s calendar entries under a Freedom of Information Act request, but it confirmed the dates of key appointments.
On six occasions between March 17 and Oct. 6, Ross scheduled meetings with auto executives whose companies purchase parts from the International Automotive Components Group. Ross founded the group, and his former firm, WL Ross & Co., owns 61 percent of it today. Ross stepped down as chairman of WL Ross & Co. in 2014.
Kassinger said that Ross had an individual retirement account that included interests in two funds, WLR Recovery Fund II, L.P. and WLR Recovery Associates III, LLC, both of which had investments in IAC. Ross sold his interests in those two funds on Oct. 25.
Separately, on May 30, William A. Furman, chief executive of a rail car manufacturer named the Greenbrier Cos., wrote a letter to the Commerce Department criticizing the breadth of proposed steel tariffs, pointing to the big Japanese firm Sumitomo as an example of a “trusted supplier to the U.S. rail industry.”
Sumitomo had asked Furman to write the letter, said Jack Isselmann, Greenbrier’s vice president. Ross had been a major investor in and director of Greenbrier.
Twelve days before writing the letter, Furman had visited Ross, who took him to lunch at the White House, according to a Forbes account confirmed by Isselmann. A Commerce Department spokesman called it a social lunch — and the secretary paid for it himself, the spokesman added.
At that time, Ross still owned $250,000 to $500,000 worth of Greenbrier stock.
Although he filed a statement in November saying he had sold off the portions of his vast stock portfolio that he was required to sell, Ross later disclosed that he overlooked his shares in several companies, including Greenbrier, that had issued stock for his work as a director.
Fox, the former OGE general counsel, said that may run afoul of ethics requirements, even though Ross says he was unaware that he still held some Greenbrier shares.
“The fact that a company benefits or not is not the test of whether a federal employee violates the statute,” Fox said. “The question is whether someone took official action that had an effect on an entity that had a financial interest. Whether you benefited or not is immaterial to whether you’ve broken the law.”
Isselmann said there was nothing nefarious about Furman’s meetings with Ross.
“We don’t have secret meetings. They’re scheduled and appear on a public calendar. That’s why they are available to media,” he said. “We don’t take secret positions and we don’t look for any unique or special treatment.” The letter on behalf of Sumitomo is also publicly available.
The lunch at the White House was “an opportunity for our CEO to see the White House mess, which is a unique opportunity for an American citizen,” Greenbrier said.
Kassinger said that the bulk of Ross’s interest in Greenbrier was through the WL Ross Recovery Associates 4 fund, which Ross sold in October and reported. However, he still owned $250,000 to $500,000 worth of Greenbrier stock that he didn’t sell until Dec. 14, according to a later OGE disclosure statement.
Greenbrier is just one of the holdings Ross has had to defend or explain to ethics officials, Thune and Wyden.
His substantial stake in Invesco, which bought his WL Ross private equity firm in 2006, was largely moved into a trust that benefits Ross’s two daughters, Kassinger said.
But Ross had a second, smaller bucket of Invesco shares that he says he thought were sold at the same time. He said that after he noticed he still held the shares, he sold them on Dec. 19 and 20.
Ross’s other delayed stock sales were smaller. They included Air Lease Corp., a commercial aircraft leasing company, Sun Bancorp, and Navigator, a shipping company that does business with Russian firms. Ross said that his ethics agreement did not require the sale of Navigator shares, but that he sold them anyway.
In July, Ross said he would sell all his holdings including those permitted by his ethics agreement. “My investments were complex and included hundreds of items,” he said in a statement in July. “I self-reported each error, and worked diligently with my department’s ethics officials to make sure I avoided any conflicts of interest.”
Ross said that when he discovered that he still owned shares in Navigator, they were in a trust account and could not be sold for several days while they were moved into a brokerage account. So he shorted Navigator to get rid of his interest quickly.
Short selling is a device that sophisticated investors use to bet that a stock’s value will decline.
The Office of Government Ethics took a dim view of Ross’s use of the short-selling techniques.
In a July 12 letter to Ross, David J. Apol, acting director and general counsel of the OGE, called the short positions “an ineffective attempt to remedy your actual or apparent failure to timely divest assets” as agreed. Apol said Ross should seek guidance from his ethics officer “before engaging in any self-help to try to remedy any ethics-related situations that may arise in the future.”