Wednesday, March 29, 2017

Our New Commerce Secretary Has A Big Conflict Of Interest

Each line represents the path of a ship in the Diamond S Shipping Group fleet in 2016. Commerce Secretary Wilbur Ross is a major investor in the company.

The following a part of an excellent article by Carrie Levine at the Center for Public Integrity. It outlines the huge conflict of interest that Wilbur Ross, the new Commerce Secretary, has. He will be making and forwarding policies that will financially benefit his own investments. Ms. Levine writes:

When private equity billionaire Wilbur Ross Jr. signed on to be President Donald Trump’s commerce secretary, he agreed to divest millions of dollars in assets.
But one asset Ross plans to keep is his stake in Diamond S Shipping Group Inc., one of the world’s largest owners and operators of medium-range tanker vessels, which crisscross the globe as crucial cogs in the transoceanic shipping trade. In a new administration full of successful businessmen dealing with a complex web of conflict-of-interest concerns, Ross’ part ownership of Diamond S Shipping stands out.
Center for Public Integrity examination of Diamond S Shipping’s operations found its vessels sail under Chinese flags, even as Ross is being tapped to take an unusually muscular role shaping U.S. trade policy under President Trump’s "America First" mantra. The company has ties to a major Chinese investment fund, and one of its ships has traveled to an Iranian port.
Diamond S Shipping has also said it has — and may continue in the future to — “call on ports located in countries subject to sanctions and embargoes imposed by the U.S. government and countries identified … as state sponsors of terrorism, such as Cuba, Iran, Sudan and Syria,” according to its 2014 filingwith the Securities and Exchange Commission.
And one of Diamond S Shipping’s main customers recently acquired a stake in a Russian national oil company.
Ross has said he doesn’t believe the shipping investment presents a conflict. To take the Trump administration job, Ross agreed to step down from positions with the company, according to his ethics agreement, and plans to be a passive investor going forward.
Commerce Department spokesman James Rockas declined to answer specific Center for Public Integrity questions about Ross’ Diamond S Shipping investments, but emailed a statement that in part reads: “Commerce’s ethics officials provide the Secretary with ongoing guidance to avoid any potential conflicts of interest.”
Ethics lawyers offered a range of opinions on potential conflicts presented by Ross’ Diamond S Shipping investment.
Tom Fitton, president of conservative watchdog Judicial Watch, said the Diamond S Shipping stake represents but a tiny sliver of Ross’ assets, and the idea he would have to broadly recuse himself from his duties is “absurdity.”
But Richard W. Painter, who was a top ethics lawyer in the George W. Bush administration, disagrees: “That shipping company is going to be a big problem with respect to him being involved with trade under the conflict of interest statute.”
Diamond S Shipping is based in Greenwich, Connecticut, but is incorporated offshore in the Marshall Islands. The company lists a total 45 tankers on its website.
In 2011, Ross’ private equity company, WL Ross, led a coalition of investorsthat put about $1 billion into Diamond S Shipping. According to the company’s 2014 SEC filing, his private equity firm at the time was the company’s largest shareholder, with nearly one-third of the company’s shares.
It is impossible to determine the exact value of Ross’ stake in the privately held Diamond S Shipping based on his government-mandated financial disclosures. But the total value of assets he said he is not divesting, which includes investments in transoceanic shipping and real estate financing interests, together falls between $12.2 million and $36.5 million, according to the disclosures, which value assets within a range.

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