Wilbur Ross

Wilbur Ross
Wilbur Ross

In the early 1990s, Donald Trump’s Resorts International was in deep financial trouble based on its ownership of three failing casinos in Atlantic City, NJ. Although some investors wanted to push Trump out, Wilbur Ross, acting as Senior Managing Director of Rothschild Inc., convinced a group of investors to bail out Trump, allowing him to retain control of the casinos. Source

Ross served on the board of the U.S.-Russia Investment Fund under President Bill Clinton. Since 2014, Ross was the vice-chairman of the board of Bank of Cyprus PCL. Wiki

Cyprus has long been considered a tax haven for Russian oligarchs. Just prior to Ross gaining his position at the Bank of Cyprus, amid deep financial troubles, in 2013 the bank had accepted a bailout from the EU, the IMF, and the European Central Bank. Under the terms of the bailout, the Bank of Cyprus seized the funds from many of the bank’s wealthy Russian deposit holders, and those Russian deposit holders became shareholders in the bank. In 2014, Ross purchased a €400 million stake in the Bank of Cyprus, resulting in his appointment as its vice-chairman. Ross shared this position with Vladimir Strzhalkovsky, a former KGB official and Putin ally. Ross would appoint former Deutsche Bank CEO Josef Ackerman as Chairman. Ackerman had strong ties with Putin, and with Herman Gref of Sberbank, Russia’s largest bank. In 2015, with advice from Deutsche Bank, the Bank of Cyprus sold its Russia-based businesses, including loan exposures, for €7 million to Artem Avetisyan, a Russian banker also having ties to Putin and Sberbank. These assets had been purchased for €450 million in 2008. Source1 Source2

In 2015, Ross additionally eased the terms of Alfa Bank‘s repayment of €100 million in debt relating to Alfa’s purchase of the Bank of Cyprus’s Ukranian assets. Source

On November 24, 2016, Donald Trump nominated Wilbur Ross for US Secretary of Commerce. Source Ross celebrated his nomination at an event hosted by Navigator Holdings, a shipping firm that he was a board member of at the time. Although Ross would step down from Navigator’s board after joining the Trump administration, he maintained a substantial ownership stake and a position as general partner. Navigator earns millions of dollars a year transporting liquefied natural gas for Sibur, a formerly government-controlled Russian energy company now largely owned by Gennady Timchenko, a Russian oligarch and close ally to Vladimir Putin who is subject to US sanctions; and Kirill Shamalov, Putin’s son-in-law. Source

David Butters, Navigator’s CEO, told investors in a 2016 call that Navigator was benefiting as Sibur beat out American competitors in the European energy market. Source However, Butters told Bloomberg News that at the event celebrating Ross’s cabinet nomination, Ross told him, “Your interest is aligned to mine… The U.S. economy will grow, and Navigator will be a beneficiary.” Source

Ross’s investment in Navigator is held by a chain of companies in the Cayman Islands. Source

Ross first invested in Navigator Holdings in November 2011; three months later the company chartered its first two ships to Sibur. Source Ross’s press secretary, James Rockas, lied about both the date of Ross’s initial investment in Navigator, and the date the Navigator-Sibur deal was signed, to claim that the deal was made before Ross joined Navigator’s board. Rockas also lied by falsely claiming that WL Ross & Co. had never owned a majority of Navigator shares. In fact, WL Ross & Co. had issued a press release in August 2012, titled, “WL Ross Agrees To Acquire Majority Stake In Navigator.” Source

Discussion

Richard W. Painter, chief ethics lawyer in the George W. Bush administration, said that if Ross stands to benefit, albeit indirectly, from a Russian firm controlled by members of Mr. Putin’s inner circle, it poses a potential ethical conflict with his role as the lead cabinet member on trade policy. Source

Although Ross apparently said he thinks his interests as Secretary of Commerce are aligned with Navigator’s interests, Butters’s statement in the 2016 investor call seems to directly contradict this. Even without that statement, though, Ross clearly has an incentive to steer policy to benefit Navigator even if that policy is adverse to US interests. And it appears that Navigator’s interests are more aligned with those of Russia than the US.