This isn't loading properly so if you can you might want to click the word buttton a couple of lines down:
Begin quote from:
Commerce Secretary's Offshore Ties to Putin 'Cronies' - The New York ...
https://www.nytimes.com/2017/11/05/world/wilbur-ross-russia.html
1 hour ago - After becoming commerce secretary, Wilbur L. Ross
Jr. retained investments in a shipping firm he once controlled that has
significant business ties to a Russian oligarch subject to American
sanctions and President Vladimir V. Putin’s son-in-law, according to
newly disclosed ...
After
becoming commerce secretary, Wilbur L. Ross Jr. retained investments in
a shipping firm he once controlled that has significant business ties
to a Russian oligarch subject to American sanctions and President
Vladimir V. Putin’s son-in-law, according to newly disclosed documents.
The shipper, Navigator Holdings, earns millions of dollars a year transporting gas for one of its top clients, a giant Russian energy company called Sibur,
whose owners include the oligarch and Mr. Putin’s family member.
Despite selling off numerous other holdings to join the Trump
administration and spearhead its “America first” trade policy, Mr. Ross
kept an investment in Navigator, which increased its business dealings
with Sibur even as the West sought to punish Russia’s energy sector over
Mr. Putin’s incursions into Ukraine.
The Paradise Papers
A series of stories that
reveal the offshore financial dealings of some of the world's biggest
corporations and wealthiest people. Nearly 100 news organizations in an
international collaboration examined more than 13 million leaked
documents from a law firm, an offshore services company and corporate
registries from tax havens.
Partnerships
used by Mr. Ross, whose private equity firm has long been the biggest
shareholder in Navigator, have a 31 percent stake in the company. Though
his personal share of that stake was reduced as he took office in
February, he retained an investment in the partnerships valued between
$2 million and $10 million, and stood to earn a higher share of profits
as a general partner, according to his government ethics disclosure and securities filings.
Mr.
Ross’s stake in Navigator has been held by a chain of companies in the
Cayman Islands, one of several tax havens where much of his wealth,
estimated at more than $2 billion, has been tied to similar investment
vehicles. Details of these arrangements surfaced in a cache of leaked
files from Appleby, one of
the world’s largest offshore law firms, which administered some 50
companies and partnerships in the Caymans and elsewhere connected to Mr.
Ross.
The Appleby documents, obtained by the German newspaper Süddeutsche Zeitung, were shared with the International Consortium of Investigative Journalists
and other media organizations, including The New York Times. They show
how the Bermuda-based Appleby worked to help the wealthy elite, from
Russian oligarchs to Middle Eastern princes, as well as multinational
corporations like Apple and Nike, avoid billions of dollars in taxes.
Continue reading the main stor
Partnerships
used by Mr. Ross, whose private equity firm has long been the biggest
shareholder in Navigator, have a 31 percent stake in the company. Though
his personal share of that stake was reduced as he took office in
February, he retained an investment in the partnerships valued between
$2 million and $10 million, and stood to earn a higher share of profits
as a general partner, according to his government ethics disclosure and securities filings.
Mr.
Ross’s stake in Navigator has been held by a chain of companies in the
Cayman Islands, one of several tax havens where much of his wealth,
estimated at more than $2 billion, has been tied to similar investment
vehicles. Details of these arrangements surfaced in a cache of leaked
files from Appleby, one of
the world’s largest offshore law firms, which administered some 50
companies and partnerships in the Caymans and elsewhere connected to Mr.
Ross.
The Appleby documents, obtained by the German newspaper Süddeutsche Zeitung, were shared with the International Consortium of Investigative Journalists
and other media organizations, including The New York Times. They show
how the Bermuda-based Appleby worked to help the wealthy elite, from
Russian oligarchs to Middle Eastern princes, as well as multinational
corporations like Apple and Nike, avoid billions of dollars in taxes.
Continue reading the main story
In
addition to Mr. Ross, the files contain references to other members of
the Trump administration, including Gary D. Cohn, the chief economic
adviser who was associated with 22 Bermuda entities while an executive
at Goldman Sachs, and Secretary of State Rex W. Tillerson, who was a
director of a Bermuda-based joint venture with the government of Yemen
when he ran Exxon Mobil’s operations there. There is no evidence of
illegality in any of their dealings.
Mr.
Ross emerges as a particularly valued client for the offshore law firm,
whose records provide more insight into his financial holdings beyond
the public ethics disclosures he made upon joining the Trump
administration. His ethics agreement filed in January listed the
partnerships he intended to keep, but not the investments they held.
Previously, Navigator had been mentioned in a separate, 57-page
description of his holdings for the year that ended in December 2016,
but with no hint of its ties to Sibur.
Sibur’s top ownership — including Gennady Timchenko, who is Mr. Putin’s friend and judo partner and is subject to American sanctions, and Kirill Shamalov,
who is married to the Russian president’s youngest daughter — makes it
“a company with crony connections” in Moscow, said Daniel Fried, a
Russia expert who served in senior State Department posts in Republican
and Democratic administrations.
Another
of Navigator’s major customers is PDVSA, the Venezuelan state oil
company, controlled by the authoritarian regime of Nicolás Maduro. The
Trump administration imposed sanctions on PDVSA this summer.
In
a written response to questions by the Times, James Rockas, a spokesman
for Mr. Ross, said that Navigator’s relationship with Sibur began
before Mr. Ross joined the board in March 2012, and that he had never
met the Russian oligarchs who are Sibur’s major shareholders. Public
records show that Mr. Ross’s firm became a major investor in Navigator
in November 2011, three months before the company chartered its first
ships to Sibur.
“Sibur was not under sanctions at the time the contract was signed and is still not subject to sanctions,” Mr. Rockas said.
More
broadly, he said that Mr. Ross “recuses himself from any matters
focused on transoceanic shipping vessels, but has been generally
supportive of the administration’s sanctions of Russian and Venezuelan
entities.”
“Secretary
Ross has never had to seek, nor received, any ethics exemption,” Mr.
Rockas said, “and he works closely with Commerce Department ethics
officials to ensure the highest ethical standards.”
It
is perhaps unsurprising that Navigator would have a relationship with a
major Russian company during Mr. Ross’s tenure. Much like President
Trump, whose company sought approval for a hotel project in Moscow
as recently as last year, Mr. Ross has long shown an appreciation for
the untapped potential of Russian markets when seeking investment
opportunities. His involvement there dates at least to the 1990s, when
he was appointed by President Bill Clinton to the board of the U.S.
Russia Investment Fund, established to promote American business
interests in Russia.
In addition to Navigator, his firm also acquired
a German rail car company, VTG, which pursued an expansion strategy in
Russia before Mr. Ross sold his stake in 2016. And Mr. Ross led a
private bailout
of the Bank of Cyprus, long regarded as a favorite financial haven of
wealthy Russians, after the worldwide economic crisis crippled the
Cypriot banking system.
In
the wake of reports of Russian interference in the United States
presidential election, multiple investigations have explored potential
business ties between Russia and members of the Trump administration.
While several Trump campaign and business associates have come under
scrutiny, until now no business connections have been reported between
senior administration officials and members of Mr. Putin’s family or
inner circle.
During
Mr. Ross’s confirmation process, he was asked repeatedly about his
business ties to Russia, mostly related to his former role as vice
chairman of the Bank of Cyprus, where he dealt with Russian investors
but also forced some of them out of the bank. He was also asked about
his investment in another shipping company, Diamond S, and whether its
dealings with China could pose a conflict with his government duties.
But he faced no questions about Navigator and its significant financial
relationship with Sibur.
Mr.
Rockas did not respond to questions about the current status of Mr.
Ross’s investment. If Mr. Ross stands to benefit, albeit indirectly,
from a Russian firm controlled by members of Mr. Putin’s inner circle,
it poses a potential conflict with his role as the lead cabinet member
on trade policy, ethics experts said. Richard W. Painter, who served as
chief ethics lawyer in the George W. Bush White House and has emerged as
a frequent critic of the Trump administration, said that while Mr.
Ross’s continued investment in Navigator would not violate any laws, it
created other ethical concerns.
“Apart
from those legal issues,” Mr. Painter said, “I’d be very concerned that
someone in the U.S. government was making money from dealing with the
Russians.”
As for Navigator, its leadership sees blue skies ahead with one of its key investors now at the helm of American trade policy.
On
Nov. 30 of last year, hours after being nominated as commerce
secretary, Mr. Ross celebrated at Gramercy Tavern, an upscale Manhattan
restaurant, at an event hosted by Navigator. He and David J. Butters,
Navigator’s chief executive, arrived early to a private room and had a
chat.
“Your interest is aligned to mine,” Mr. Butters recalls Mr. Ross saying, according to Bloomberg Businessweek. “The U.S. economy will grow, and Navigator will be a beneficiary.”
Got a confidential news tip?
The New York Times would like to hear from readers who want
to share messages and materials with our journalists.
Looking East
Mr.
Ross’s foray into transoceanic shipping took off in 2011, when his
private equity firm, WL Ross & Co., assembled teams of investors to
acquire major stakes in Diamond S Shipping and Navigator Holdings. Both
firms specialized in chartering tankers to petroleum companies that need
to move gas, oil and petrochemicals around the world. With Mr. Ross’s
involvement, they would expand their business interests in China and
Russia.
The investments
— eventually totaling more than $600 million in Diamond S and about
$240 million in Navigator — were in keeping with Mr. Ross’s strategy of
scooping up shares in undervalued companies and turning them around. It
is a business model that has earned Mr. Ross, a 79-year-old Ivy
League-educated son of middle-class parents from New Jersey, the
sobriquet of “king of bankruptcy.”
Over
a lengthy investment career that included a stint running the
bankruptcy advisory practice at the British banking firm Rothschild, he
has breathed new life into textile, steel and auto-part businesses.
While at Rothschild in the early 1990s, he led a group of bondholders in
a restructuring of the floundering Trump casinos in Atlantic City,
preserving a stake for Mr. Trump because, as he reportedly assured
disgruntled investors, the Trump name was “still very much an asset.”
Mr.
Ross’s business practices have occasionally drawn criticism for moving
American jobs overseas in an effort to improve profits. A Reuters
analysis of Labor Department statistics found that his takeovers
shifted 2,700 jobs in automotive, textiles and mortgage finance to,
among other places, China, India, Mexico and Nicaragua.
In
the statement to The Times, Mr. Ross’s spokesman said, “Private equity
firms have a responsibility to their investors to optimize corporate
structures, and Secretary Ross has decades of experience that he is now
using to benefit American workers.”
As
worldwide shipping concerns, Diamond S and Navigator did not have much
of a labor footprint in the United States when Mr. Ross and his
investors took over. But the way both companies did business would pose
potential conflicts with American interests in other ways.
Alongside
Mr. Ross, another large investor in Diamond S was a company controlled
by the Chinese government, according to securities filings. And
Navigator signed a charter agreement with Sibur shortly after Mr. Ross’s
firm made its investment. Sibur said in a statement that any
negotiations with Navigator over the years were carried out by its
executives, not its major shareholders, and that “no meetings were held
with Mr. Ross.”
Initially,
Navigator chartered two vessels to Sibur, and later increased the fleet
to four. The relationship proved to be so profitable that Navigator’s
chief executive, Mr. Butters, told investors in a 2016 conference call
how Navigator benefited as Sibur beat out American competitors in the
growing European energy market.
“Russia
is pipelining as much natural gas as needed into Europe, and liquids
are being shipped into all areas of the continent in increasing amounts,
all in competition with longer-haul U.S. exports,” Mr. Butters said.
Putin Connections
As one of the largest gas companies in Russia, Sibur is not just any private business.
It
was created by the Russian government and maintains a close dependency
on Moscow, even after its sale in 2010 to Mr. Timchenko and Leonid Mikhelson.
The two men are typical of Russian moguls who have benefited from
state-owned assets and are expected to remain loyal to the Putin
government, said Amos J. Hochstein, a top energy diplomat under the
Obama administration.
“When you start doing business with Russian energy companies like Gazprom
and Sibur, you’re not just getting into bed with the company,” Mr.
Hochstein said. “You’re getting into bed with the Russian state.”
The
ties to the Russian president, however, proved to be a double-edged
sword for Sibur’s owners. In 2014, after Russia seized Crimea from
Ukraine, American and Western allies imposed economic sanctions on key
Putin associates, including Mr. Timchenko. A few months later, the
United States barred banks from providing new financing to another gas
company, Novatek, belonging to Mr. Mikhelson.
Sibur
itself was not targeted. But financial institutions, including Bank of
America and the Royal Bank of Scotland, backed away from loans to the
company, according to news reports
at the time. Moscow stepped in to help in May 2014, when a
government-backed financial consortium bought a shipping terminal from
Sibur and pledged to expand export capacity, while allowing Sibur to
remain the terminal’s sole exporter of gas.
Then,
in September 2014, as sanctions pressure was growing, Mr. Timchenko
reduced his holdings in Sibur by selling a 17 percent stake to a junior
shareholder, Mr. Shamalov. A year earlier, Mr. Shamalov, whose father is
a friend and former business partner of Mr. Putin’s, had married the
Russian president’s daughter Katerina. His Sibur purchase, which pushed
the 32-year-old Mr. Shamalov’s investment to more than 20 percent of the
company, was financed by a $1.3 billion loan from the state-backed
Gazprombank. Mr. Shamalov sold part of his stake in April, reducing it
to 3.9 percent.
Most
of these financial machinations were carried out through offshore
companies on Cyprus, where Mr. Mikhelson and Mr. Timchenko held their
investments in Sibur and did business with several Cypriot banks. During
the summer of 2014, Mr. Ross had become the Bank of Cyprus’s vice
chairman, though there is no indication that he crossed paths with the
two oligarchs during his tenure there.
His
position at the bank required him to step down from the board of
Navigator, however, even as he retained his investment in the company.
His close associate at WL Ross & Co., Wendy L. Teramoto, took his place at Navigator and, later, left to join Mr. Ross as chief of staff at the Commerce Department.
Despite
the reluctance of Western financial institutions to do business with
Sibur and its owners, Navigator’s relationship with Sibur continued to
grow.
From
2014 to 2015, the portion of Navigator’s total revenue that came from
Sibur jumped to 9.1 percent from 5.3 percent, making the company one of
its top five clients, according to securities filings, before dipping to
7.9 percent last year.
Ethics Disclosures
As
WL Ross & Co. expanded over the years, it used Appleby, the
offshore specialist, to set up an increasing number of entities in tax
havens, many in the Cayman Islands. This British territory in the
Caribbean levies no corporate or personal income tax on money earned
outside its jurisdiction, and requires little disclosure of corporate
ownership. By 2014, Mr. Ross and his investment company were among
Appleby’s top 20 clients.
After he was nominated as commerce secretary, Mr. Ross filed an agreement
with the federal Office of Government Ethics saying he would resign
from WL Ross & Co. and divest from 80 companies and partnerships,
but would keep a stake in nine others that held assets in “real estate
financing and mortgage lending” and “transoceanic shipping.” The
underlying assets were not specified.
His
financial disclosure form offered more detail, including a list of
assets that had been held by each of the partnerships that he retained.
Navigator Holdings appeared in connection with four Appleby-managed
Cayman partnerships. Mr. Ross’s ethics filing valued his stake in those
partnerships at between $2.05 million and $10.1 million, a fraction of
the partnerships’ combined 31.5 percent stake in Navigator, which, based
on the firm’s recent stock price, was worth roughly $179 million. In
all, WL Ross & Co. remains Navigator’s largest shareholder,
according to the shipping company’s most recent annual report.
Federal
ethics law requires officials to recuse themselves from matters that
would have “a direct and predictable” effect on their financial
interests or cause a reasonable doubt about their impartiality. During
his confirmation hearings, Mr. Ross sought to reassure senators that he
would avoid any conflicts of interest between his continued business
holdings and his cabinet post.
“I intend to be quite scrupulous about recusal and any topic where there is the slightest scintilla of doubt,” he said.
No comments:
Post a Comment