As a wealthy and experienced investor, Commerce Secretary Wilbur Ross was expected to bring polish and sagacity to his job in the Trump cabinet.
But a Forbes magazine report this week has suggested Ross has brought tarnish and imprudence. The magazine disclosed that Ross had kept stakes in Chinese-owned companies, a shipping firm tied to leading Russians, and a Cypriot bank while holding public office. In some cases where he did sell his shares, family members retained interests that some ethics experts said could pose conflicts of interest for Ross in trade talks.
After Ross learned that Forbes was preparing an article about his investments last fall, he short-sold stock in the Russian-linked company — a risky tactic used for by sophisticated investors betting that a stock price will go down.
Yet when Ross testified at a Senate Finance Committee hearing Wednesday, not a single lawmaker asked about his financial dealings.
Only one committee member — Sen. Ron Wyden (Oreg.), the committee’s ranking Democrat — mentioned them at all.
The relative lack of attention was a statement of its own, some observers said, adding that a swirl of ethical questions around President Trump and his Cabinet have numbed some lawmakers.
“At this point, since the bar is so low, it loses a certain amount of cachet,” one GOP lobbyist said.
In his opening remarks, Wyden lashed out at Ross.
“You don’t need a thick government rule book to recognize flagrant conflicts of interest when they’re brought into public view,” Wyden said. “When it comes to trade, Americans have a right to know it’s their best interest Trump administration officials are looking out for at the negotiating table. The stories that we have seen in the last few days call that into question.”
Ross has asserted that there are perfectly good, if not simple, explanations for his investment activity. In a statement late Tuesday, he said critics have made “unfounded allegations” that he engaged in insider trading. “My overriding concern is to comply with the ethics laws and my ethics agreement, and to go beyond required divestitures to remove any appearance of a conflict of interest,” he said.
Ross said that he had sold what he believed to be all of his large position in the Russian-linked shipping company Navigator last year.
He said that he learned in late October, however, that he still owned shares. That company did business with a Russian energy firm whose directors included a Russian oligarch who was subject to U.S. sanctions and a son-in-law of Russian President Vladimir Putin.
“In keeping with my earlier decision to divest Navigator stock to remove any appearance of a conflict of interest, I immediately sold the shares I had just learned of,” Ross said.
Doing that was complicated, Ross explained. He said he could not sell the shares directly because they were being moved from a trust managed by an agent to one of Ross’s brokerage accounts.
“Here is where the transaction listed as a short sale comes in,” Ross said in the statement. “The New York Stock Exchange (NYSE) requires that a transfer of shares occur within two days of a sale. As a result, to complete the divestiture as quickly as possible, I had to borrow shares in Navigator equal to the number of shares I sold to complete the transaction under the NYSE rules.” He said he “then replaced the borrowed shares with the shares held in my name when I received them a few weeks later.”
Ethics experts from earlier presidential administrations were unconvinced.
“I don’t find it to be a plausible or credible answer,” said Norman Eisen, the chair of Citizens for Responsibility and Ethics in Washington, who served as chief ethics counselor to President Barack Obama.
“I certainly wouldn’t have recommended shorting the shares after he received bad news, arguably insider information, that would cause the stock to go down,” Eisen said. He said shorting stock “only protects you if the stock goes down, and he had arguably insider information that that could happen.”
In his statement, Ross said that there was no issue of insider information. He said he was not required to sell his Navigator stock and that he did not receive private information because of his position. He added that a reporter planning to do a story about him was “not market moving information.”
Forbes also pointed to areas where Ross’s job as a trade negotiator overlapped with some of his or his family’s business.
“In September 2017, one of the investments Ross still personally held, Luxembourg-based International Automotive Components Group, closed a new joint venture,” the magazine said. “As part of the deal, WL Ross funds took a 30 percent interest alongside a state-owned company named Shanghai Shenda and got roughly $300 million in cash. The same month, top Chinese officials hosted trade talks with none other than Wilbur Ross.”
In the Finance Committee hearing, Wyden seized upon those transactions to highlight the Ross family’s interests in the auto parts maker.
“Ross is a key Trump official, negotiating with China, determining who gets tariff exemptions and potentially reshaping the American automobile industry for decades to come,” Wyden said. “New developments show that, while Secretary Ross was negotiating on trade with China, he may have maintained financial ties with firms connected to the Chinese government.”
The flap marks the second time Ross’s financial dealings have come under scrutiny. Last fall, Forbes ran a story saying Ross had greatly exaggerated his wealth for the magazine’s ranking of wealthy individuals. The magazine said Ross had claimed wealth of $2.9 billion but was worth about $700 million.
The International Consortium of Investigative Journalists, a nonprofit reporting group, found that Ross had retained an investment in Navigator after joining Trump’s Cabinet and that Ross’s senior adviser at Commerce had kept a seat on the Navigator board until July 17, 2017.
Ross, an early supporter of Trump’s presidential ambitions, weathered that storm. And he has kept a leading role in trade talks as other members of Trump’s cabinet have been snagged in ethics controversies, most notably Environmental Protection Agency Administrator Scott Pruitt.
“This, unfortunately, is not a one-off story,” Wyden said at the committee hearing. “Virtually every day in the news, you get whacked over the head with another report about Trump officials violating ethics rules or coming into questionable windfalls.”