When Commerce Secretary Wilbur Ross in July forged a deal with China to shut down excess steel capacity that was undercutting U.S. producers, he had every reason to expect President Trump's approval.
The deal was the culmination of a 100-day, high-level negotiation launched by Trump and Chinese President Xi Jinping during their summit in Mar-a-Lago in April, and steered by Ross and his senior aide Wendy Teramoto. Now the Chinese Vice Premier Wang Yang had arrived and the news conferences were scheduled.
Instead, Trump rejected the plan in harsh terms. It wasn't tough enough. The president fumed and talked about imposing tariffs. The news conferences were canceled.
It was startling, say former officials and lobbyists who were told about the incident (first reported in the Financial Times), and it marked a rare sign of trouble for a Cabinet member who has been one of Trump's favorites.
Few Trump advisers have been as close to the president as Ross. The Wall Street private-equity manager helped rescue Trump from bankruptcy in 1990. He was an early supporter of Trump's presidential ambitions and spent election night with Trump and his closest associates and relatives. And in the initial months of the administration, Ross was a fixture in the White House, where Trump frequently sought out his view.
Now Ross faces another test of his relationship with Trump.
This time, it isn't a matter of policy but a question of whether a mercurial president already under public pressure will remain loyal during allegations that Ross exaggerated his wealth and, after joining the Cabinet, retained investments with commercial ties to people well connected in Russia.
Forbes magazine, which had perennially put Ross high on its list of billionaires — with a net worth of as much as $2.9 billion — based in large part on information Ross provided in phone conversations and emails, reported in November that he was worth only $700 million.
"It seems clear that Ross lied to us," Dan Alexander, a staff writer at the magazine, wrote, "the latest in an apparent sequence of fibs, exaggerations, omissions, fabrications and whoppers."
In addition, the International Consortium of Investigative Journalists, a nonprofit reporting group backed by a dozen foundations, delved into documents known as the Paradise Papers, an enormous collection of leaked confidential documents about offshore investments.
The ICIJ learned that Ross had divested of most, but not all, of his investments before taking the Cabinet job. He had retained an investment in a shipping firm called Navigator Holdings. That company did business with a Russian energy firm whose directors included a Russian oligarch subject to U.S. sanctions and a son-in-law of Russian President Vladimir Putin. The United States had imposed sanctions on Russia after it annexed Ukraine's Crimea and aided separatists in eastern Ukraine.
Teramoto, who had served as Ross's chief of staff at Invesco, became a senior adviser to him at Commerce. But she kept her seat on the board of the shipping company until July 17, just before she was formally elevated as Ross's chief of staff at Commerce. A department spokesman said she complied with conflict-of-interest rules because she quit the board before she became Ross's chief of staff.
Many of Ross's acquaintances were taken aback by the disclosures.
"I've known him and dealt with him and like him," said one top Republican lobbyist who spoke on the condition of anonymity to protect his business relationships. "But you sit there and say to yourself, 'Wilbur, where's your lightbulb?' "
In mid-November, six members of the Senate Commerce Committee, all Democrats, asked the Commerce Department inspector general to investigate whether Ross had fully disclosed his holdings or divested them in a timely manner, and whether Teramoto had a conflict of interest.
"There is nothing that wasn't disclosed," Ross said in an interview with CNBC in November. "So the idea that I might add something new has a false premise." He added that in his hearings and disclosures, "I frankly felt quite thoroughly X-rayed."
Others, however, question Ross's handling of the questions and of the Forbes rankings.
"Given the allegation by Forbes that he engaged in a pattern of deception about his net worth, it calls into question whether we can accept his denials at face value," said Norman Eisen, a fellow at the Brookings Institution and President Barack Obama's special counsel on ethics. Noting Ross's failure to promptly sell his interest in the shipping company, Eisen said, "Why did he hang onto this company? What's the reason?"
Ross said that there was nothing inappropriate about Navigator's business with the Russian company. "If our government decided to sanction them, that would be a different story. Our government has not thus far made the determination to sanction them," he said. He added, "The fact that it happens to be called a Russian company does not mean there's any evil in it."
Ross joined the Trump administration thinking that he would be the leading voice on trade.
"The president has announced a very big focus that he has in mind for me is trade," Ross said on CNBC on March 3.
From the start, Ross was treated as a person with influence in the administration. He held court with Saudi Arabia's foreign minister; dined with Thai business leaders; and conferred with executives from General Electric, banks and pharmaceutical companies, according to lobbyists who arranged and attended such sessions.
But the confirmation in May of Robert E. Lighthizer as U.S. Trade Representative brought in a competitor. Lighthizer soon took the lead in renegotiating the North American Free Trade Agreement. As an international trade lawyer, he brings more than three decades' experience attempting to block steel imports, and he put a dent in the U.S. trade deficit with China.
A Commerce Department official says senior officials at the office of the USTR and Commerce consult "on a daily basis."
The July negotiations with China were handled by Teramoto, later his chief of staff. Former officials and lobbyists say she did not consult with career officials from Commerce, State and USTR, and that as a result, she and Ross embraced concessions China had already agreed to as new.
"In the early harvest for their 100-day plan, though, some outcomes emerged that were old wine in new bottles, and in a few instances, water was mixed into that wine," Claire Reade, a lawyer at Arnold & Porter Kaye Scholer and a former assistant U.S. trade representative for China, wrote in a commentary for the Center for Strategic and International Studies.
Before becoming Commerce secretary, Ross built a fortune buying bankrupt companies and anticipating future government policies that would prove beneficial to their revival.
On Feb. 28, 2002, the W.L. Ross private investment firm bought the assets of bankrupt steel manufacturer LTV for $325 million. A week later, President George W. Bush, who had been under pressure to protect the industry, slapped tariffs of up to 30 percent on imported steel. In the reorganization, Ross was able to shift pension liabilities of 85,000 retirees onto the federal government. Ross, who also bought the ailing Bethlehem Steel, later sold his reconstituted steel firm for a handsome profit.
"Ross put a bunch of mothballed plants back in business, and he looked like a genius," said another restructuring expert, who also spoke on the condition of anonymity to protect business relationships. "The timing was very propitious."
In 2006, Ross pulled off another coup, buying ailing auto-parts manufacturers and assembling a sprawling enterprise with 27 facilities in Europe, Japan and South America.
He also invested funds in the insolvent Bank of Cyprus at one of the low points for banks in Europe. The Central Bank of Cyprus was its lifeline, pumping money into the enterprise, the island's main commercial lender. Ross became vice chairman. Another investor with 5.5 percent was Viktor Vekselberg, a Russian oligarch who made much of his fortune as an investor in TNK-BP, a lucrative joint oil venture later sold to Rosneft.
Under Ross, the Bank of Cyprus sold off its Romanian, Ukrainian and Russian assets to focus more on business at home. And in January it repaid the last of the 11.4 billion euros of emergency liquidity assistance it had received from the central bank.
If Ross inflated his wealth to Forbes, why would he have done that? One GOP lobbyist said "when you have money, people will bring you money." In many of the deals, Ross invested relatively modest sums and then made larger amounts as the general partner of funds raised from others.
But now Ross stands in an awkward place.
How will that affect his influence? Trump may not care, whether accepting a bit of self-aggrandizement or dismissing the reporting by news organizations he commonly calls fake.
"The president and Secretary Ross have had a strong relationship for decades, which began during their time in business," White House press secretary Sarah Huckabee Sanders said after the recent reports.
As long as Ross has the ear of the president, companies and government officials will continue to seek him out. During Trump's visit to China, Ross was involved in the signing of a multibillion-dollar memorandum of understanding for future trade deals he said would provide a "foundation for a stronger relationship that is more free, fair and reciprocal between the U.S. and China."
"I don't see any diminishment in people thinking Ross is a great go-to guy in this administration," said a GOP lobbyist, who said Ross is still the person to see for executives trying to get a deal done or win approval from the Committee on Foreign Investment in the United States, which reviews foreign bids to take over U.S. firms. "Ross is a go-to guy for people trying to get business done," he said.
But others see trouble ahead.
If his disclosure form is correct, then he may have been lying to Forbes. If he has been telling Forbes the truth — including an explanation that he moved about $2 billion into trusts after the Forbes rankings were calculated — then his disclosure form probably should have shown additional sources of income in 2016, ethics experts say. Ross would not comment for this article, but he told Forbes "I'm not the beneficiary of them." He said "That's the point. This is set up for children and things like that."
Lying to Forbes isn't illegal. But a federal disclosure form omission could be. And that would overshadow any relationship with the president. That's what the Democratic senators want the inspector general to examine.
"That's the threshold thing," the lobbyist said. "I don't think this is fatal unless somewhere along the way a law got broken."