Secrets of Wilbur Ross's ghost state

Becoming US Secretary of Commerce, Wilbur Ross promised to give up his assets. But he did not. His family now owns an extremely toxic investment portfolio, in which there are, for example, shares of companies related to Vladimir Putin's inner circle.
22.06.2018
Forbes
Origin source
The reconciliation of the candidacies of new members of the cabinet of the US President was a real headache for Donald Trump. At the same time, the candidacy of Wilbur Ross was approved immediately. Unlike the newcomer Rex Tillerson, prone to conflicts Scott Pruitt (head of the Environmental Protection Agency) and Betsi Devos (Minister of Education), who was not ready for his duties, whose statement was passed with a squeak, Wilbur Ross had all the makings to become Minister of Trade: dozens of years in business, an excellent track record. In his blue business suit, he even looked like a real minister. In addition, unlike Donald Trump, Wilbur Ross promised to give up virtually all of his assets after joining the Cabinet. As a result, Wilbur Ross received praise from members of both parties and was easily approved as minister of trade. "You really did make a great sacrifice. For the sake of the civil service, you literally gave up hundreds of millions of dollars, "Richard Blumenthal, a Democratic Senator from Connecticut, praised Ross's act. In November 2017, in a statement to the Office of Government Ethics, Wilbur Ross confirmed in writing that he had refused all assets.

This turned out to be untrue. The results of the Forbes investigation showed:

For most of last year, Wilbur Ross served as Minister of Commerce and at the same time owned shares in several Chinese state companies, a shipping company linked to Vladimir Putin's close circle, a Cypriot bank that was reportedly in the center of an investigation by former FBI chief Robert Mueller and a large auto parts manufacturer , who became a suspect in the investigation, which is being carried out by Wilbur Ross himself. It is difficult to imagine a more toxic investment portfolio for a member of the US cabinet of ministers.

Apparently, the Wilbur Ross family still owns these assets. Instead of abandoning them, the US Secretary of Commerce sold part of the shares to the investment bank Goldman Sachs, the other part handed over to members of his family for trust management. At the same time, he continued to conduct business with China, Russia and other states, knowing that the shares his family owns are directly related to these countries.

Last fall, from the so-called paradise dossier, it became known about the relationship of the US Secretary of Commerce with the inner circle of Vladimir Putin through the shipping company Navigator Holdings. Wilbur Ross, most likely, knew in advance about the forthcoming publication of documents of the offshore registrar Appleby and played on the lowering of the share price of the Kremlin-related company.

Absurd, but the presence of all these conflicts of interest seems to be quite legitimate: first of all, because the US professional ethics laws, regrettably, do not provide for the possibility of finding in power such tycoons as Donald Trump or Wilbur Ross .

Nevertheless, Wilbur Ross could still break one law: despite the November promise to abandon all assets, Ross for some time kept the shares of his former employer, investment company Invesco, with a total value of more than $ 10 million. He also continued to play on lowering the share price Bank Sun Bancorp, from the share in which he previously promised to refuse. Ross got rid of these papers only in December 2017.

How does Wilbur Ross comment on this situation now? Practically nothing. When Forbes asked a month ago what became of Ross's assets, the spokesman for the Minister of Commerce expressed his hope to receive an answer by the next day. Five days later, he sent a short statement stating that Wilbur Ross is obliged to state the data on all his current assets in the annual financial declaration, which he has not yet made up. The press secretary had another two weeks to respond to a detailed list of questions from Forbes. Most of them, however, he refused to answer. At the same time, he stressed that Wilbur Ross still got rid of his assets. And to the question, indeed Wilbur Ross could have violated the law by lying to federal authorities, the spokesman was categorical. "The minister did not lie," he said, adding that Minister Ross provided an additional package of documents, as amended, which is currently being considered by the Office of Government Ethics.

The man who deceived Forbes

Wilbur Ross is not famous for always telling the truth. Last autumn, right after returning from a business trip to Asia, Wilbur Ross called the Forbes office to lie about the size of his fortune. Forbes for many years included Ross in the rating of dollar billionaires, when he became a minister, published a financial declaration, it turned out that his fortune does not exceed $ 700 million. Forbes demanded to clarify the situation - Wilbur Ross quietly referred to certain assets worth $ 2 billion, data on which need not be indicated in the declaration. The US Secretary of Commerce said that he created the trust and transferred part of his fortune to the trustees of his family.

It seems that these billions never existed. But when six senators demanded an investigation into the case, Wilbur Ross insisted that there was some truth in his statements: "When I was talking to the Forbes journalist, the process of creating this trust for members of my family was already underway. This is a way to abandon my assets in order to comply with the agreement on professional ethics. " But under this agreement Wilbur Ross had to either sell the assets or give them away. Just transfer them to the trust was not enough.

Richard Blumenthal, the same senator who previously praised the trade minister for giving up assets, asked Wilbur Ross to describe the structure of the trust. Ross did not do it. This uncertainty and the fact that the Office of Government Ethics never released the documents stating that Wilbur Ross fulfilled his promise and got rid of the assets covered the financial situation of the US Secretary of Commerce with a cloud of secrecy. The bodies for monitoring the observance of the laws on professional ethics were incriminating reports, journalists were wondering whether the shares of the conflicting companies are at the disposal of Wilbur Ross. The host of Fox News even demanded that Donald Trump fired Wilbur Ross.

All this time, the explanation that Wilbur Ross gave regarding the future fate of his assets, was hidden in a document he submitted to the Office of Government Ethics. Within five months, the management team could not endorse and publish the document. But recently it was published.

According to a document filed with the Office of Government Ethics, Wilbur Ross got rid of most of his assets on October 25, 2017. He sold his shares to an "independent third party". Forbes confirmed that this side was the investment bank Goldman Sachs. But the share in the companies where Wilbur Ross is listed as a general partner, he transferred to the trust. Neither he nor his wife is listed as beneficiaries of the trust. Recently, the companies whose shares Wilbur Ross transferred to the trust, showed not the most impressive indicators-it is unclear whether they will be able to make a big profit in the future. But if the value of these companies suddenly increases, the beneficiaries of the trust will receive millions of dollars. However, if the beneficiaries partially pay dividends, but then the amount of investment decreases, they may even have to return the amount received. It is likely that this is the reason why the US Secretary of Commerce transferred this stake to the trust. Representatives Wilbur Ross did not answer how exactly the trust is arranged.

The document does not say who acts as the beneficiaries of the trust. Apparently, during the October call to the Forbes editor, Wilbur Ross casually mentioned them. This is the only known case when the US Secretary of Commerce publicly discussed the trust that he used to comply with the agreement on professional ethics. "I'm not a beneficiary," Wilbur told Ross, when asked about the trust. "That's the whole point. The trust was created for children and so on. " According to Ross, among the beneficiaries of the trust there are no people who are not members of his family. Thus, according to Wilbur Ross, he ensured compliance with the agreement on professional ethics. Technically, the transfer of shares to family members is considered a waiver of assets. But now in the hands of his family members are shares of companies associated with a group of people, in relation to whom Wilbur Ross as US trade minister should take a tougher stance.

Chinese friend

Now Wilbur Ross's main concern is a trade war between the two largest economies of the world, the US and China. Long before joining the US government, Wilbur Ross was already doing business with the Chinese government. In 2009, its WL Ross fund invested $ 100 million in the Chinese wind power producer Longyuan Power, which planned to receive the listing. For a fund specializing in bankruptcies, this was not the most typical investment. Putting shares on the stock exchange is as far from bankruptcy as possible. However, according to four former employees of WL Ross, the main reason for investing in Longyuan Power was not at all a desire to make a profit. "The only purpose of those investments was to get the Chinese positioned," said one of Wilbur Ross's former colleagues.

According to former WL Ross managers, Wilbur Ross hoped to get an investment for his fund from China's state-owned China Investment Corp. The more funds the Chinese company invested in the fund, the higher was Ross's fee and commission for management. In other words, Wilbur Ross invested the money of other people in a dubious exit on the stock exchange in order to earn more in the future. In the end, China Investment Corp. invested in the fund of the future US trade minister about $ 500 million. But investments in Longyuan Power were cut from $ 100 million to $ 90 million, then the WL Ross fund sold shares of the company. A spokesman for Wilbur Ross called the assumptions about the real purpose of investment in Longyuan Power "stupid and erroneous."

Thanks to Chinese investments, Wilbur Ross was able to become an investor in the shipping company Diamond S Shipping, which owns 45 tankers around the world. In fact, this made him a business partner of the Chinese government. Despite this, Ross from the very beginning told the staff of the Office of Government Ethics that he did not plan to part with Diamond S Shipping. This statement entailed many questions during one of the sittings of the Senate. According to senators, the share of Ross in the tanker company could cause a conflict of interest if he became a member of the Cabinet. Despite the internal documents of the WL Ross Foundation, which say that the globalization that the Trump administration frightens the whole world during the negotiations on trade, contributes to the successful development of Diamond S Shipping, Wilbur Ross still dismissed the concerns of the senators. "We conducted a study, the results of which suggest that the US Department of Commerce has never dealt with the case of any shipping company," he said at a meeting of the Senate. In November, spokesman Wilbur Ross told representatives of the non-profit organization Center for Public Integrity that the Minister of Commerce voluntarily refused to take a share in Diamond S Shipping. But "abandoning" the share, Ross, apparently, again just passed it to family members.

The ties between the Ross family and the Chinese government are even deeper. In September 2017, the Luxembourg auto parts manufacturer International Automotive Components Group, of which Ross was then a shareholder, created a new joint venture with WL Ross, the owner of 30% of the shares, together with the Chinese state company Shanghai Shenda. WL Ross also received approximately $ 300 million in cash. In the same month, senior Chinese officials held negotiations on trade, which was attended by none other than Wilbur Ross.

The shadow of Putin

Two months later, the International Consortium of Investigative Journalists published a "paradise file", a real treasure trove of documents containing information on offshore operations of the world's richest people. One of the most sensational findings of a journalistic investigation - the US Secretary of Commerce owns a share in the shipping company Navigator Holdings, associated with the inner circle of Vladimir Putin.

But Ross claimed that he got rid of the company's shares on October 25, 2017 - a couple of days before the publication of the "paradise dossier." Six days later, he played to lower the stock price of Navigator Holdings. This meant that if the stock price of Navigator Holdings was to drop rapidly due to the disclosure of the "heavenly file," Wilbur Ross might still make a profit. Quotes Navigator Holdings, however, fell not immediately after the publication of documents that caused a furore all over the world. During the scandal, they fell 4%. This happened 11 days before Ross closed the short position, apparently, having made a profit.

His family still owns a share in Navigator Holdings, as well as in the Cyprus Bank of Cyprus, another company associated with Russia. In 2014, after the successful sale of the shares of the Irish Bank of Ireland, which was in the debt hole of the Irish Bank of Ireland, whose seat on the board of directors was occupied by Ross, he drew attention to a Cypriot bank that in 2008 acquired the Russian Uniastrum Bank for almost $ 600 million. Wilbur Ross joined the board of directors of the bank as one of the vice-presidents. He shared his powers with Vladimir Strzhalkovsky, who allegedly served alongside Vladimir Putin in the KGB, and then became deputy minister of economic development and trade of Russia. The problem for Ross's colleagues was the fact that the economy of Cyprus was in a state of chaos. Saving the bank could only be a miracle. "He wanted to become a member of the board of directors of an international bank again. He liked to fly there by Invesco. Probably, he mistakenly considered this a good idea, "- believes the former colleague of the Minister of Trade. The idea, however, proved to be a failure. The economy of Cyprus struggled to recover after the economic downturn. According to former employees of WL Ross, the profit that the Bank of Cyprus brought was hardly comparable to the profit from the Irish bank.

Another bad idea of ​​Wilbur Ross - apparently, he burdened his family members with shares in a Cypriot bank. The largest shareholder of the Bank of Cyprus is Viktor Vekselberg, whom, according to former colleague Ross, the Minister of Trade once hosted in his office in 2014. In early 2018, Viktor Vekselberg, too, was in New York, they accepted it, however, quite differently. Employees of the special prosecutor Robert Mueller, who is investigating Russian interference in the presidential election in 2016, stopped a businessman at the airport for questioning. It turned out that the company, which was considered a subsidiary of Vekselberg in the US, soon after the inauguration of Donald Trump invested more than half a million dollars in an organization owned by Trump's lawyer Michael Cohen.

Most former employees of the investment fund WL Ross, who spoke with Forbes, believe that the Minister of Trade had nothing to do with the payments to Michael Cohen and Russia's interference in the presidential elections. But why did he not completely get rid of the stake in the bank, if the press pays such attention to the relations of Donald Trump with Russia? A former colleague of the Minister of Commerce, who had worked with him for a long time, said: "This thing just smells very bad."

At the end of last month, President Donald Trump made a statement that, in calmer times, would not have gone off the front pages for several days. In the era of Trump, however, he was not given much importance. He announced a possible investigation into the import of auto parts and referred to the threat of "national security of the United States." The head of the investigation, in his opinion, should be a person who understands the automotive business - Wilbur Ross.

Before becoming a US trade minister, Wilbur Ross established the International Automotive Components Group. Today it is the third manufacturer of auto parts in the world - according to own words. The company has 50 manufacturing facilities in 20 countries and headquarters in Luxembourg. Depending on the company's revenues in the next few years, the International Automotive Components Group may become one of the many assets of the Ross family, which, perhaps, will bring it fabulous profits.

This is a real nightmare from the point of view of professional ethics. Wilbur Ross, who heads the investigation, may in theory be blind to the questions related to the International Automotive Components Group. In addition, he can amend the conclusion of the US Department of Commerce on this company and deal with the elimination of competitors. This is also absolutely legal, because, according to the documents, Wilbur Ross fulfilled the requirements of the US government and gave up assets. Nevertheless, observers continue to ask tirelessly whether Wilbur Ross acts in the interest of the country or in the interests of his family.

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