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.

A 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.

A Letter From Bill Richardson

Anyone who reads this blog regularly will know that I am a big believer in and supporter of New Mexico Governor Bill Richardson. I believe he is one of the most gifted politicians and diplomats in this country.

When he announced as a presidential candidate, I jumped on the bandwagon early. I supported him with this blog, and even opened my rather thin wallet to donate a few hundred dollars. That didn't work out, but I was very pleased that Obama chose him to be his Secretary of Commerce.

So it was a big disappointment for me when he withdrew his name from consideration as Commerce Secretary a couple of days ago. But I understand. I appreciate the fact that he does not want to cause problems for the Obama administration. Bush is leaving Obama with enough problems. Maybe Richardson can serve later after his problem has been settled (and I believe it will be settled and he'll emerge with his reputation intact).

I also appreciate that Richardson thought enough of his supporters to send them a letter explaining his decision to withdraw his name from consideration. Here is a copy of the letter I received yesterday:

Dear Ted, For nearly three decades, I have been honored to serve my state and our nation in Congress, at the U.N., as Secretary of Energy and as governor. So when the President-elect asked me to serve as Secretary of Commerce, I felt a duty to answer the call. I felt that duty particularly because America is facing such extraordinary economic challenges. The Department of Commerce must play an important role in solving them by helping to grow the new jobs and businesses America so badly needs. It is also because of that sense of urgency about the work of the Commerce Department that I have asked the President-elect not to move forward with my nomination at this time. I do so with great sorrow. But a pending investigation of a company that has done business with New Mexico state government promises to extend for several weeks or, perhaps, even months. Let me say unequivocally that I and my Administration have acted properly in all matters and that this investigation will bear out that fact. But I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process. Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the President-elect and his Administration to delay for one day the important work that needs to be done. So, for now, I will remain in the job I love, Governor of New Mexico, and will continue to work every day, with Lieutenant Governor Diane Denish, to make a positive difference in the lives of New Mexicans. I believe she will be a terrific governor in the future. I appreciate the confidence President-elect Obama has shown in me, and value our friendship and working partnership. I told him that I am eager to serve in the future in any way he deems useful. And like all Americans, I pray for his success and the success of our beloved country. I've included President-elect Obama's statement in response to my own: Statement of the President-elect: It's with deep regret that I accept Governor Bill Richardson's decision to withdraw his name for nomination as the next Secretary of Commerce. He is an outstanding public servant and would have brought to the job of Commerce Secretary and our economic team great insights accumulated through an extraordinary career in federal and state office. It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet in order to avoid any delay in filling this important economic post at this critical time. Although we must move quickly to fill the void left by Governor Richardson's decision, I look forward to his future service to our country and in my administration. Thank you for your past and continued support. I look forward to putting this matter to rest and in the meantime I am preparing for the upcoming New Mexico legislative session. All my best wishes, Bill Richardson Governor of New Mexico