By Bill Allison (Bloomberg) — U.S. Commerce Secretary Wilbur Ross said Thursday that he would divest all his remaining equity holdings after the government’s top ethics watchdog said his failure to sell off assets that could pose a conflict of interest “created the potential for a serious criminal violation.”
In his ethics agreement, Ross, a New York businessman, had pledged to divest numerous assets, including all his holdings in Invesco Ltd., within 90 days of his confirmation, and more complex assets within 180 days.
But in reports filed in the last month by the Office of Government Ethics, Ross disclosed sales of assets which, the filings said, he had inadvertently failed to sell on time, including at least $20 million worth of Invesco shares. That led the ethics office’s acting director, David Apol, to tell Ross in a letter released Thursday that his failure to sell the assets may have “negatively affected” public trust in the Trump administration.
A review by the top ethics official in the Commerce Department of Ross’s calendars, briefing books and correspondence found no evidence that Ross violated conflict of interest laws, Apol wrote. He added, however, that “your failure to divest created the potential for a serious criminal violation on your part and undermined public confidence.”
Ross defended himself in a statement. “My investments were complex and included hundreds of items,” he said, adding that he “self-reported” his errors, and worked with Commerce’s ethics office to avoid conflicts. Ross said that to restore public trust, he would sell equities he was allowed to retain under his ethics agreement and place the proceeds in U.S. Treasury securities.
Lack of Consultation
Apol also faulted Ross for using short sales in a bid to divest stocks in time to meet the deadlines set in his ethics agreement without first consulting ethics officials at the Commerce Department. Ross has taken short positions on five stocks.
Ross used a short sale in October to dump as much as $250,000 worth of stock in Navigator Holdings Ltd., a shipping firm that did business with a petrochemical company linked to associates of Russian President Vladimir Putin. The sale came shortly after he learned the New York Times was preparing an article on the investment. Under the terms of Ross’s ethics agreement, he wasn’t required to divest his holdings in the company.
The transaction wasn’t disclosed for seven months while ethics officials reviewed it. He said he used a short sale because he didn’t have access to the shares to sell them and that there was no profit or loss on the transaction.
Ross also sold between $20 million and $50 million worth of Invesco shares last December, about eight months after he had promised to divest them, explaining that he mistakenly believed the holdings had already been sold. The shares increased in value by 15.5 percent in the interim.
Invesco, an investment management company, acquired Ross’s company, WL Ross & Co. LLC. in 2006.
In reports filed with OGE, Ross also disclosed late sales of at least $250,000 worth of stock in Greenbrier Companies Inc. and $1,000 in Sun Bancorp Inc. in December, and at least $50,000 in Air Lease Corp. in June, long after he was supposed to divest them. In each case, Ross explained he had been unaware that he still held the assets.
Ross received a 90-day extension beyond a May 15 deadline to file his financial disclosure for 2017. Apol urged the Commerce secretary to “devote the resources necessary” to ensure the report is accurate, and avoid “any self-help” remedies in future attempts to comply with ethics rules.
Ross disclosed assets worth at least $336 million ahead of his Senate confirmation hearing; nominees disclose the value of their holdings in broad ranges. The Bloomberg Billionaire’s Index calculated his net worth at $860 million in November.
© 2018 Bloomberg L.P