Commerce Secretary business relationship with Putin's family

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Wilbur Ross, the commerce secretary in the Trump administration, shares business interests with Vladimir Putin’s immediate family, and he failed to clearly disclose those interests when he was being confirmed for his cabinet position.

Ross — a billionaire industrialist — retains an interest in a shipping company, Navigator Holdings, that was partially owned by his former investment company. One of Navigator’s most important business relationships is with a Russian energy firm controlled, in turn, by Putin’s son-in-law and other members of the Russian president’s inner circle.

Ross, through a Commerce Department spokesperson, issued a statement saying that he recuses himself as secretary from any matters regarding transoceanic shipping, and said he works closely with ethics officials in the department “to ensure the highest ethical standards.”

The statement said Ross “has been generally supportive of the Administration’s sanctions of Russian” business entities. But the statement did not address the question of whether he informed Congress or the Commerce Department that he was retaining an interest in companies that have close Russian ties.

In his submission letter to the government, Ross pledged to cut ties with more than 80 financial entities in which he has interests.

The documents seen by NBC News, however, along with a careful examination of filings with the Securities and Exchange Commission, tell a different story than the one Ross told at his confirmation. Ross divested most of his holdings, but did not reveal to the government the full details of the holdings he kept.

In his letter to the ethics official of the Commerce Department, Ross created two lists: those entities and interests he planned to get rid of and those he intended to keep. The second list consisted of nine entities, four of which were Cayman Islands companies represented and managed by the Appleby law firm, which specializes in creating complex offshore holdings for wealthy clients and businesses. The Wilbur Ross Group is one of the firm’s biggest clients, according to the leaked documents, connected to more than 60 offshore holdings.

The four holdings on the list of assets that Ross held onto were valued by him on the form as between $2.05 million and $10.1 million. These four, in turn, are linked through ownership chains to two other entities, WLR Recovery Fund IV DSS AIV L.P. and WLR Recovery Fund V DSS AIV L.P., which were listed in Ross’ financial disclosure prior to confirmation, but were not among the assets he declared he would retain. According to an SEC filing, those entities hold 17.5 million shares in Navigator, which constitutes control of nearly one-third of the shipping firm.

“You look at all of these names,” Clark said, referring to the financial entities, “and they actually look like a code. And what we actually have to do is find — in a sense — a code that decrypts what these names mean and what these companies actually do.”

She said the way the companies were listed was deliberately vague. “I would say this gives the appearance of transparency,” she said, referring to Ross’s disclosure documents. “It’s sort of fake transparency in a sense.”

And a cursory look at Navigator’s annual reports reveal an apparent conflict of interest. Navigator’s second-largest client is SIBUR, the Russian petrochemical giant. According to Navigator’s 2017 SEC filing, SIBUR was listed among its top five clients, based on total revenue for the previous two years. In 2016, Navigator’s annual reports show SIBUR brought in $23.2 million in revenue and another $28.7 million the following year.

The business relationship has been so profitable that in January, around the time Ross was being vetted for his Cabinet position, Navigator held a naming ceremony for two state-of-the-art tankers on long-term leases to SIBUR.

A third shareholder of SIBUR – and deputy chairman of the board – is Kirill Shamalov, husband of Vladimir Putin’s daughter, Katerina Tikhonova. After the wedding, Shamalov’s meteoric rise to wealth led him to own as much as 21.3 percent of SIBUR’s stock until April, when he sold off around 17 percent for a reported $2 billion.

The Commerce Department statement said Ross never met Timchenko, Mikhelson, or Shamalov. It said he was not on the board of Navigator in March 2011 when the ships in question were acquired, or the following February when the charter agreement with Sibur was signed. It said Sibur was not under U.S. sanctions now or in 2012. The statement said Ross was on the board of Navigator from March 30, 2012 to 2014, and that no funds managed by his company ever owned a majority of Navigator’s shares.

But as The Guardian reported Sunday, other public documents suggest a different story. A Navigator news release on March 2, 2012, said that Ross was already on the board at that point, and Sibur's annual report for 2012 said the deal with Navigator was signed in March. In addition, Ross' company issued a news release on Aug. 10, 2012, saying that the company had agreed to acquire a majority stake in Navigator.

Fried said he has no doubt of the connections between SIBUR and the Kremlin.

“If any senior official of the U.S. government, much less a Cabinet secretary … had any business dealings with sanctioned individuals, direct or indirect,” he said, “I would be appalled.”

“Secretary Ross cannot participate in any discussion or decision-making or recommendation about sanctions imposed on Russia or on Russian nationals when he owns a company that is doing business with Russian nationals who are either under sanctions or who could come under sanctions in any future sanctions regime,” Painter said. “That would be a criminal offense for him to participate in any such matter.”