Wilbur Ross Says He Will Sell Stock After Watchdog Warns of Potential Criminal Violation

WASHINGTON — Wilbur Ross, the commerce secretary, said he would sell all of his remaining stock holdings after the Office of Government Ethics faulted him for continuing to maintain investments that he was required to divest, and entering into new ones.

In a strongly worded letter, the ethics office said Ross’ continued ownership of assets that his ethics agreement required him to divest — and his decision to open short sale positions while serving as Commerce secretary — could have placed him in position to violate criminal conflict of interest laws. It also faulted him for “various omissions and inaccurate statements” in documents filed with the Office of Government Ethics.

“Your failure to divest created the potential for a serious criminal violation on your part and undermined public confidence,” David Apol, acting director of the ethics office, wrote in a letter dated Thursday.

In a statement Thursday evening, Ross said he had made “inadvertent errors” and would sell all of his equity holdings and place the proceeds in U.S. Treasury bills “to maintain the public trust.”

“I take my ethics obligations very seriously,” Ross said. “My investments were complex and included hundreds of items. I self-reported each error, and worked diligently with my department’s ethics officials to make sure I avoided any conflicts of interest.”

The value of the investments Ross continued to hold was significant, including stock sales worth at least $10 million.

“This is not like the change that falls out in between the sofa cushions,” said Kathleen Clark, a professor of law and an ethics expert at Washington University. “This is a significant falsity.”

Norman Eisen, an ethics czar in the Obama White House and the chairman of the government watchdog group CREW, said Ross “evidenced a level of recklessness that in a normal administration would be extraordinary.”

Ross, a financier who built his fortune through decades of restructuring distressed businesses, has been dogged by questions about his finances since the release last year of the Paradise Papers, a cache of documents from an offshore law firm obtained by the German newspaper Süddeutsche Zeitung. Those documents showed Ross retained a financial stake in the shipping firm Navigator Holdings, which has a partnership with a Russian energy company owned by oligarchs with close ties to President Vladimir Putin of Russia.

Three business days after Ross was contacted by The New York Times for a forthcoming article about those ties, he took out a short position valued at between $100,000 and $250,000 on Navigator’s stock — essentially a bet that the stock’s value would decrease — putting him in a position to potentially profit from negative news about the company. The company’s stock price fell roughly 4 percent before Ross closed his position, 11 days after The Times and the International Consortium of Investigative Journalists published an article on his ties to Navigator.

In a response in June, Ross said that the information the reporter had contacted him about was not “market-moving” and that making money was not the goal of the short sale.

The letter from the Office of Government Ethics also cited Ross for failing to sell stock in a company called Invesco, the parent company of his private equity firm, W.L. Ross & Co., in keeping with his ethics agreement. Ross signed a form in November 2017 saying he had completed divestitures he had agreed to earlier that year, but in December, he submitted a report revealing he had not sold the Invesco stake until Dec. 19-20.

The office said an internal Commerce Department investigation that reviewed Ross’ calendars, briefing books and correspondence did not indicate the presence of a criminal violation, and it had no evidence to contradict Ross’ argument that the omissions and inaccuracies were inadvertent. However, it added that even inadvertent errors could damage public trust and violate criminal conflict of interest law. Federal ethics rules prohibit government employees from using information they view in the course of their work for private profit.

“It is a serious matter, particularly when you’re dealing with someone like the secretary of Commerce, who has his finger on so many decisions that affect businesses and financial investments,” said Richard Briffault, a professor at Columbia Law School.

Sen. Ron Wyden, D-Ore., called on the Justice Department to investigate the transactions.

“The top federal ethics watchdog confirmed what anyone with eyes and ears already knew: Wilbur Ross’ stock trades seriously compromised his ability to act in America’s best interests, and may have broken the law,” Wyden said. “In light of this report, the Justice Department should conduct a thorough investigation to ensure that Ross was working on behalf of all Americans and not just his own bank account.”

Potential ethics violations have dogged several high-profile members of the Trump administration, including Scott Pruitt, the former chief of the Environmental Protection Agency, who resigned last week after facing questions about his spending, travel and conduct, and Tom Price, the former secretary of health and human services, who resigned last year after drawing criticism for spending at least $400,000 on chartered flights.

Forbes removed Ross from its list of the 400 richest Americans in 2017, after his ethics disclosures showed his assets to be less than $700 million, a fraction of what Forbes had previously reported and what Ross had previously claimed.

Clark said the errors Ross made demanded further inquiry. “I’m not saying Ross violated the criminal conflict of interest statute; I’m not saying that he intentionally made a false statement,” she said. “But both of those things need to be investigated.”

Marilyn L. Glynn, who served as general counsel and acting director of the Office of Government Ethics during the George W. Bush administration, said given how many errors were present in Ross’ accounts a further investigation was warranted, including by the inspector general for Commerce.

“There’s a lot of smoke here,” Glynn said. “So the inspector general should find out if there is a fire.”