Wilbur Ross’s nomination for Secretary of Commerce presented many of the same challenges as Betsy DeVos’s nomination due to his extensive and complicated financial holdings. Secretary Ross reported assets on his financial disclosure form ranging from $337 million to $687 million in total value and income of between $16 million and $55 million.[i] Although Secretary Ross agreed to divest at least 80 assets and investment funds and to step down from more than four-dozen funds or companies,[ii] he was permitted to retain certain holdings that nevertheless raise serious ethics concerns and require further examination in light of his duties and responsibilities as Commerce Secretary and his role overseeing the administration’s trade policy. In particular, Secretary Ross’s extensive holdings in Diamond S Shipping Group Inc., in which his co-investor is the Chinese government, raise questions about his ability to oversee U.S. trade policy. In addition, while he agreed to divest from the Bank of Cyprus, his investment in the bank, which has ties to a confidant of Russian President Vladimir Putin, raised questions about possible loans made by the bank to the Trump campaign and the bank’s dealings with persons under U.S. sanctions.

Nevertheless, after an initial postponement of Secretary Ross’s Senate confirmation hearing to allow time for him to obtain the necessary paperwork from the Office of Government Ethics,[iii] his hearing and confirmation moved through the Senate “with relative ease.”[iv] He was confirmed on February 27, 2017 in a 72-27 vote.[v]

Diamond S Shipping Group Inc.

Secretary Ross’s significant holdings in Diamond S Shipping Group Inc.[vi] present a fundamental conflict of interest for the Commerce Secretary since the company is “one of the largest owners and operators of medium-range tanker vessels” and participates in the transoceanic shipping trade.[vii] Its success is largely reliant on transporting oil. According to a 2014 SEC filing, Diamond S provides “seaborne transportation of refined petroleum and other products in the international shipping markets.”[viii]

Dow Jones reported that that the Chinese government’s sovereign wealth fund, China Investment Corp., is a co-investor in Diamond S,[ix] and the Center for Public Integrity examined Diamond S’s shipping operations and found that its vessels sail under Chinese flags.[x] Given these facts, there is a fundamental question about whether Secretary Ross can be involved in trade issues involving China while continuing to be invested in Diamond S.

There are other potential ethics concerns rising from Secretary Ross’s investment in Diamond S. Senator Maria Cantwell noted that Secretary Ross’s Diamond S holdings create a conflict of interest regarding some environmental issues because as Commerce Secretary he has the authority to determine financial liability from oil spills for tanker companies such as Diamond S.[xi]

Based on Secretary Ross’s investment partners in Diamond S and the company’s business operations, the scope of matters from which Secretary Ross should recuse include shipping matters, oil and gas matters, trade, investment and foreign policy matters involving China, and environmental regulations and policy matters that would affect the oceans and shipping industry. A more comprehensive recusal is appropriate to avoid potential conflicts of interest and to avoid any appearance of lack of impartiality.[xii]

Bank of Cyprus

According to his public financial disclosure report, Secretary Ross served as Director and Vice Chairman of the Bank of Cyprus beginning in November 2014.[xiii] Under his ethics agreement, he was to resign from this position upon his appointment and to divest his financial interest in the bank.[xiv]

His position with the Bank of Cyprus raised questions during his confirmation hearing given its connection to various Russian actors with close ties to Russian President Putin and to banks that are subject to U.S. sanctions.[xv] At the time Secretary Ross invested in the Bank of Cyprus, the State Department considered Cyprus an area of “primary concern” for money laundering.[xvi] In 2015, while Secretary Ross was vice-chair, the bank’s Russia-based businesses were sold to a Russian banker and consultant, Artem Avetisyan, who had ties to both Putin and to Russia’s largest bank, Sberbank, which was under both U.S. and European Union sanctions at the time.[xvii]

During the confirmation process, several senators also asked Secretary Ross about the Bank of Cyprus’s ties to another confidant of Russian President Putin and the possibility of loans made by the bank to the Trump campaign.[xviii] The senators further questioned him about his relationship with the bank’s second largest shareholder, Viktor Vekselberg.[xix] Vekselberg reportedly is a close friend of Russian President Putin and at one time sat on the board of directors of the Russian state-controlled oil giant Rosneft, which is under partial sanctions with the Treasury Department.[xx]

Secretary Ross never responded to these inquiries, but was later confronted with some of the same questions during a television interview.[xxi] When asked specifically about the bank’s involvement with persons under sanctions, Secretary Ross responded that he did not knowingly approve a loan to a person under sanctions, claiming that “none of the loans went to anybody with sanctions that I’m aware of and nor were there any great big deposits from sanctioned parties that came in while I was involved, that I was aware of.” [xxii] Secretary Ross also denied that the bank had made any loans to the Trump campaign, stating, “Certainly not to my knowledge.”[xxiii]

Notably, Secretary Ross did not deny that the bank had dealings with sanctioned persons, only stating that he was not aware of any such deals. As a result, his responses raise questions about the extent of the bank’s business with Russians subject to U.S. sanctions and his ties to Putin confidants. Given the concerns about the role of the Bank of Cyprus in dealings with persons subject to U.S. sanctions and the lack of full transparency about these dealings, Secretary Ross should be recused from participating in policy and trade matters involving Russia or Cyprus to avoid any question of impropriety.

[i] Matthew Goldstein, Commerce Pick Wilbur Ross to Divest at Least 80 Holdings, New York Times, Jan. 17, 2017, available at https://www.nytimes.com/2017/01/17/business/commerce-secretary-pick-wilbur-ross.html; Wilbur L. Ross, Public Financial Disclosure Report, Dec. 19, 2017, available at https://extapps2.oge.gov/201/Presiden.nsf/PAS+Index/88642A2CA81AA6C2852580AB00618C8C/$FILE/Ross%20Wilbur%20L.%20Final%20278.pdf.

[ii] Id.; Letter from Wilbur L. Ross to David Maggi, Alternate Designated Agency Ethics Official, Jan. 15, 2017 (“Ethics Agreement”), available at https://extapps2.oge.gov/201/Presiden.nsf/PAS+Index/F83B364B516448EF852580AB007DC94E/$FILE/Ross,%20Wilbur%20L%20finalEA.PDF.

[iii] Ben Leubsdorf, Senate Panel Delays Hearing for Wilbur Ross, Trump’s Pick as Commerce Secretary, Wall Street Journal, Jan. 10, 2017, available at https://www.wsj.com/articles/senate-panel-delays-hearing-for-wilbur-ross-trumps-pick-as-commerce-secretary-1484089756.

[iv] Alan Rappeport, Wilbur Ross, a Billionaire Investor, Is Confirmed as Commerce Secretary, New York Times, Feb. 27, 2017, available at https://www.nytimes.com/2017/02/27/us/politics/wilbur-ross-commerce-secretary.html.

[v] Matt Egan, Wilbur Ross Approved by Senate as Trump’s Commerce Secretary, CNN, Feb. 27, 2017, available at http://money.cnn.com/2017/02/27/investing/wilbur-ross-commerce-secretary-confirmation-senate/.

[vi] Wilbur L. Ross, Public Financial Disclosure Report, Dec. 19, 2017. The exact value is not easily ascertainable from Secretary Ross’ public financial disclosure report. The investment in Diamond S is reported in part 2, #10.14, at –, but with no value listed. The corresponding investment identified at part 2, #19 lists a value of $1 million to $5 million.

[vii] Carrie Levine and Chris Zubak-Skees, Wilbur Ross will shepherd Trump’s trade policy. Should he also own a shipping firm?, Center for Public Integrity, March 23, 2017, available at https://www.publicintegrity.org/2017/03/23/14509/wilbur-ross-will-shepherd-trump-s-trade-policy-should-he-also-own-shipping-firm .

[viii] Amendment No. 3 to Form S-1, Registration Statement, Mar. 6, 2014, available at https://www.documentcloud.org/documents/3521290-Diamond-S-Shipping-Group-Inc-SEC-Filing-on-March.html.

[ix] Jean Eaglesham and Lisa Schwartz, Commerce Wilbur Ross Will Keep His Stake in Chinese-Government Backed Company, Dow Jones, Feb. 13, 2017, available at https://www.morningstar.com/news/dow-jones/asia-pacific/TDJNDN_201702135024/commerce-nominee-wilbur-ross-will-keep-his-stake-in-chinesegovernmentbacked-company.html.

[x] Levine and Zubak-Skees, Center for Public Integrity, March 23, 2017.

[xi] Eaglesham and Schwarz, Dow Jones, Feb. 13, 2017.

[xii] 18 U.S.C. § 208; 5 C.F.R. § 2635.502.

[xiii] Ross, Public Financial Disclosure Report, part 1, #33.

[xiv] Id., part 2, # and Ethics Agreement.

[xv] Kevin G. Hall, Exclusive: Trump commerce pick Wilbur Ross faces new Russia questions, McClatchy, Feb. 16, 2017, available at http://www.mcclatchydc.com/news/politics-government/article133217874.html.

[xvi] Stephanie Kirchgaessner, Trump’s commerce secretary oversaw Russia deal while at Bank of Cyprus, The Guardian, Mar. 23, 2017, available at https://www.theguardian.com/us-news/2017/mar/23/wilbur-ross-russian-deal-bank-of-cyprus-donald-trump-commerce-secretary.

[xvii] Id.

[xviii] Kirchgaessner, The Guardian, Mar. 23, 2017; Hall, McClatchy, Feb. 16, 2017.

[xix] Id.

[xx] Id.

[xxi] Jake Tapper, CNN Interview with Commerce Secretary Wilbur Ross, Apr. 2, 2017, available at http://www.cnn.com/videos/politics/2017/04/02/sotu-wilbur-ross-intv.cnn (partial transcript available at http://www.realclearpolitics.com/video/2017/04/02/cnns_jake_tapper_asks_commerce_secretary_wilbur_ross_about_his_role_at_russian-connected_bank_of_cyprus.html).

[xxii] Id.

[xxiii] Id.