Six years ago, Wilbur Ross thought investing in ships would create valuable financial assets. Today, they've become risky political liabilities.

One shipping company is in a partnership with Russia, and another that the U.S. Commerce secretary partially owned is tied to China's largest sovereign wealth fund. His chief of staff served on both boards. Now U.S. senators are calling for an investigation, and ethics experts demand he divest to prevent his policy decisions from being influenced by his business interests.

Ross won't say how many ships he owns, and government disclosure laws give him the choice to keep the information secret.

An APM Reports investigation reveals Ross has financial ties to 36 previously undisclosed ships that are spread among at least nine companies. Combined with the Russia-tied company — Navigator Holdings Ltd. — Ross has a financial interest in at least 75 ships, most of which move oil and gas products across the globe. The value of those ships stands to grow as Ross negotiates trade deals on behalf of the U.S. and advises on U.S. infrastructure policy. And one fund linked to Ross was still buying and selling ships after Ross was confirmed as Commerce secretary.

APM Reports compiled the list by combing through Ross' financial disclosure forms, relying on business filings in the U.S., Luxembourg, Bermuda and the Cayman Islands, searches through shipping trade publications and through the internet domains of major shipping companies across the globe. Since many of Ross' shipping interests are privately held and are established in countries with limited transparency into business filings, it's difficult to determine the full extent of his holdings.

The ships of Wilbur Ross





Each of Ross' ships is classified below as a bulk carrier, a chemical/oil products tanker, an LPG ship or a container ship. The U.S. Commerce Secretary has a stake in at least 75 ships. APM Reports sorted through Ross' financial disclosure forms, business filings in the U.S., Luxembourg, Bermuda and the Cayman Islands, shipping trade publications, ship-tracking websites and major shipping company sites to determine the number. Ross has reportedly sold his stake in Diamond S. Shipping, despite telling a Senate confirmation committee that he would keep the asset.Each of Ross' ships is classified below as acrude oil tanker, abulk carrier, achemical/oil products tanker, anLPG ship or acontainer ship.

Nautical Bulk Holding A Bermuda-based dry bulk shipping company that was formed by Ross and three other corporate entities in 2013. Wendy Teramoto, Ross' chief of staff at the Commerce Department, continues to serve on the board of Nautical Bulk, according to Bermuda business filings . Ross' current ties to Nautical Bulk were discovered in a Luxembourg business filing that he listed on his disclosure form.

Navigator Holdings Ltd. A United Kingdom-based company that ships gas products around the globe ( fleet ). Ross served as a company director between 2012 and 2014. Teramoto served on the board between 2014 and July 2017. Ross said this week that he'll probably sell his stake in Navigator.

WLR/TRF Shipping Ross has agreements with at least nine companies in countries around the world. It's difficult to determine the full extent of his holdings because his interests are privately held and are in countries with limited transparency into business filings. Some of the entities linked to Ross, WLR/TRF Shipping S.à r.l. for example, continue to buy and sell ships.

The scrutiny of Ross' ships and the torrent of news about them in the past few days may have prompted the announcement Tuesday that he sold his interest in Diamond S. Shipping, the company with ties to China, but the sale price, the customer, and the timing of the sale weren't disclosed. The news was first reported by the Center for Public Integrity.

APM Reports published a story Monday reporting that Ross' chief of staff, Wendy Teramoto, not only served on the shipping companies' boards, but helped negotiate a trade deal with China. The International Consortium of Investigative Journalists revealed the Russia connection, reporting that Navigator does business with a company linked to Russian President Vladimir Putin. And while Forbes reported last month that Ross secretly moved $2 billion into a trust before becoming a Cabinet secretary, the magazine on Tuesday reported that he never had the money to hide, inflating his wealth to save face in the prestigious rankings of the world's richest people.

As Ross accompanies President Trump in China starting Wednesday to negotiate new business deals, Americans won't be clear which Ross will be doing their bidding: the assured wealthy businessman who charmed a confirmation committee in January, or the man in the news the past few days accused of deceit about his wealth and evasion about his conflicted financial investments.

A spokesman for the U.S. Commerce Department did not make Ross available for an interview and did not respond to repeated attempts to answer a list of 28 questions about Ross' shipping ties, though he released a statement this week saying Ross is recusing himself from all matters involving transoceanic vessels. Ross also told Bloomberg on Monday that he will probably sell his stake in Navigator but emphasized it wasn't because of the news linking the company to Russia.

U.S. Commerce Secretary Wilbur Ross, Chinese Vice Premier Wang Yang and China's Commerce Minister Zhong Shan at a signing ceremony between the two countries in Beijing on Wednesday, Nov. 8, 2017. Rao Aimin | Xinhua via AP

The expanse of Ross' shipping investments and conflicts only came to light because of the persistence of news organizations and ethics watchdog groups.

Sen. Richard Blumenthal, the Democrat from Connecticut, said Sunday that the Commerce Department's Inspector General needs to open an investigation because of Ross' opaque shipping interests and his financial relationship with a Russian business. "Secretary Ross' financial disclosures are like a Russian nesting doll, with blatant conflicts of interest carefully hidden within seemingly innocuous holding companies," Blumenthal said. "Only after a thorough investigation can the American people be sure that Secretary Ross really has their best interests at heart," he said.

Indeed, Ross' 57-page financial disclosure form is complicated and opaque, a combination that makes reading it a journey into dead ends. Some business filings have little or no information. Others aren't accessible.

His form, according to Kathleen Clark, a law professor at Washington University in St. Louis, means Ross' holdings are "hiding in plain sight." She said Ross can argue that he's providing the necessary light on his full financial picture, but still casts shade on the finer details.

As for his pledge to hold on to interests related to banking and shipping, Clark said Ross is conflicted as to whether he's acting in his own interest or the interests of the American people. "There are matters that he should not participate in as Commerce secretary because he could be affecting his own financial interest," she said.

Starting in 2000, Ross made billions for himself and his investors by surveying the business landscape, spotting and consolidating undervalued, sometimes bankrupt assets in troubled industries and selling them at a profit. He was the stereotypical Wall Street titan and earned the nickname "The King of Bankruptcy."

In December, Trump told a campaign-style crowd in Ohio that he named Ross to his cabinet because Ross was successful in the business world. The men also have been in business together. "This guy knows how to make money, folks. He knows how to make money. I'd like to put on a guy who failed all his life but we don't want that, do we?" a flamboyant Trump said to a cheering audience. "I put on a killer."

'This guy knows how to make money, folks'

At a rally in Cincinnati in December 2016, President-elect Donald Trump told a crowd, "I am going to be putting on the greatest killers you've ever seen. We need that."

Ross, the investor, bullish on shipping and energy

Since 2011, Ross bet billions that the shipping industry would profit from increased energy production in the U.S. His former investment firm, WL Ross and Co., invested $2 billion in shipping, according to a 2014 company presentation.

Page 5 of Wendy Teramoto's presentation at Marine Money in 2014. See full presentation

Today as Commerce secretary, Ross is positioned to help shape the export practices of the U.S. He's forcefully advocated for reducing the nation's trade deficit across the globe, notably in China, Mexico and Canada. In May, he announced a deal that pushes China to buy more natural gas from U.S. exporters. A chief beneficiary of those increased exports is shipping.

Ross' first investments were stakes in Diamond S. Shipping, a crude oil carrier, and Navigator Holdings, a company that moves liquid petroleum products.

He invested at a time when the shipping industry appeared to have bottomed out after the Great Recession — the industry had too many ships to move too few products. It was a classic investment strategy for Ross, who's made his money by buying and selling distressed companies in troubled sectors.

In 2002, for example, he scooped up steel companies LTV Corp., Acme Steel and Bethlehem Steel in bankruptcy. He cut costs by laying off workers, installing new work rules and stripping employee pension funds. Three years later, he sold the repackaged company for $4.5 billion, an investment strategy he used years later in the coal and textiles industries.

His hunch about shipping a few years later stemmed from the oil and gas boom in the U.S. A drilling technique known as hydraulic fracturing in shale rock formations — fracking — in the U.S. produced large amounts of crude oil, natural gas and other petroleum products. His investment in Diamond S. Shipping and Navigator Holdings was a bet that energy exports would spur growth in the shipping industry.

"There is optimism that shale gas and oil will transform the U.S. economy and require unprecedented oceangoing capacity," Ross said at the Marine Money Asia Week forum in 2012.

Most of Ross' ships — 80 percent — move oil and gas products. But the stark reality is that Ross' investments haven't paid off.

The share price of Navigator Holdings declined 47 percent since it debuted in 2013 at $19 a share. His investment firm held a 61 percent stake in the company when Ross, the majority investor, took the company public in 2013, according to business filings.

Ross also shelved his attempts to take Diamond S. Shipping public in 2014 because he felt the stock price for the company was too low.

Shipping continues to have an overcapacity problem, according to Ben Nolan, managing director of Marine Transportation Research at Stifel Financial Group, and the sector is far from its high valuations of 15 years ago.

He said that while shipping is gradually recovering, many private equity investors who gambled on the industry five years ago have cut their losses. He said others, like Ross, continue to wait for the big return.

"A lot of the reason that they still have those positions is they anticipate at some point there is going to be a better exit," he said.

Funds affiliated with Ross are still active in the shipping industry.

WLR/TRF Shipping S.à r.l. was still actively buying ships at a time when Ross was serving as Commerce secretary, according to a business filing in Luxembourg.

The fund lists five transactions between March 16 and July 13 where it purchased 11 ships and sold one.

Infrastructure policy conflicts, as well

While Ross has potential conflicts when it comes to shipping U.S. exports across the globe, he's also conflicted when it comes to U.S. ports receiving goods from other countries.

As a key figure on President Trump's infrastructure team, Ross can influence which U.S. ports receive federal funding to deepen shipping channels that would accommodate a larger fleet of ships.

That work is in high demand. APM Reports collected a list of infrastructure projects submitted to the Trump Administration. The requests include 17 port improvement projects from 14 states. Most are from states along the Atlantic seaboard and Gulf of Mexico, hoping to accommodate larger ships that can now cross the Panama Canal.

Shipping analysts say ports that fail to deepen their shipping channels will be at a significant economic disadvantage. "They don't get the bigger ships and they become disadvantaged economically versus a harbor that can dredge," said Roger King, a senior transportation analyst for CreditSights Research.

If the ports are deepened to handle big ships though, Ross could lose money.

He holds a financial interest in 17 ships that are a fraction of the size of the larger bulk carriers and container ships crossing the Panama Canal, which recently completed expansion to accommodate larger ships. Moreover, all the ships in the Navigator Holdings fleet are medium-sized ships that can dock in smaller ports, according to business filings.

Ethics experts say his personal business interests could conflict the best policy decision.

"I think if he owns interest in shipping companies, he's going to have to stay away from decisions about spending taxpayer money on fixing up the ports," said Richard Painter, a University of Minnesota law professor who served as the White House ethics lawyer under George W. Bush.

Ross has been a key figure on President Trump's infrastructure team. He co-authored the president's infrastructure proposal during the 2016 election and was directing an infrastructure advisory council of business leaders, though it's been disbanded.

Trump has not released his plans related to infrastructure but has said he wants $1 trillion in spending on roads, bridges and other projects.

Democrats go from praise to outrage over Ross' holdings

Ross said in his January confirmation hearings he intended to keep his financial stake in shipping because no shipping cases came before his department.

"The research we've done suggests that there has never been a shipping case come before the Department of Commerce and in our case, the vessels are the most environmentally up-to-date vessels that we're going to find on the water," Ross testified.

Wilbur Ross confirmation hearing

In his opening remarks (4:50), Sen. Bill Nelson, D-Florida, tells Wilbur Ross, "It tells me you are committed to doing the job the right way, by placing the public's interest ahead of your own." At the 39:40 mark, Ross explains why he will not be divesting from Diamond S. Shipping.

The committee was on board. Instead of challenging Ross' financial interests, Democrats worked to draw a distinction between Ross' pledge to divest the bulk of his interests and President Trump, who has refused to divest his holdings.

"It tells me that you are committed to doing the job the right way by placing the public's interest ahead of your own," said Sen. Bill Nelson, a Democrat from Florida. And Blumenthal praised Ross for "making a very personal sacrifice."

The exchange of warm words, though, belied a complex, hasty reality.

When Ross released his 57-page disclosure it showcased a wide array of assets. Some were clearly listed and easy to understand, like steel giant Arcelor Mittal. But many others were more complicated and included dizzying names like WLR Mezzanine Associates, WLR IV Loans AIV Feeder, L.P. and WLR Recovery Fund IV XCO AIV I, L.P.

And Ross' shipping interests were incompletely listed and not clear, buried within holding companies listed as WLR/TRF Shipping S.à r.l., DSS Holdings L.P. and Starboard GP Ltd.

Making things more difficult, Ross' confirmation hearing was held less than 24 hours after he released his financial disclosure form, leaving scant time for an in-depth review by members of the committee charged with vetting his nomination.

Legal experts say it's difficult for anyone to piece together Ross' complete financial picture in that small amount of time. By creating a complicated mix of general partnerships, holding companies and offshore accounts, Ross has made it virtually impossible to decipher his true worth.

Clark characterized Ross' financial disclosure as extremely complicated. "It's like you have a puzzle with a thousand pieces and then you dump it out on the floor and say 'Gee, I made that disclosure,'" she said.

Six days after Ross' hearing, the committee voiced no objections and approved his nomination by a voice vote. A month later, the Senate confirmed Ross' nomination 72-27.

It took nine months for the public to learn that Ross wasn't forthcoming about his entire portfolio.

Ross filed paperwork this week noting that he sold all the assets that the Office of Government Ethics said in January would create a conflict of interest for him. The detail about those transactions are not fully known yet, because federal rules don't require immediate details on each sale.

Donald Trump shakes hands with Robert Miller (right) while patting Wilbur Ross (center) on the back. The 1990 press conference announced a deal over control of Trump's troubled Taj Mahal Casino under bankruptcy court protection. Investors got a 50 percent stake in it while Trump remained chairman. Miller was an attorney and Ross a financial adviser for the bondholders. Marty Lederhandler | AP

Ross has a long connection with Trump

Ross seems to have applied his investment strategy to Donald Trump, making two big bets on the future president when others discounted him.

Ross and Trump first connected in 1990 when Trump was late on debt payments for the Taj Mahal Casino in Atlantic City. Bondholders hired Ross, who served as chief restructuring officer at Rothschild at the time, to protect their investment.

At first, Ross and the bondholders were aiming to take Trump "to the cleaners" through bankruptcy, wrote Hilary Rosenberg in the book "The Vulture Investors."

But Ross then saw Trump's star power with the public, the same charisma that helped him become president. On a visit to the casino, Ross watched as people rushed to catch a glimpse of Trump in his fleet of limousines or on the casino floor.

He then persuaded his clients to agree to a pre-approved bankruptcy settlement, because Trump still had the star power to sell the casino. "The Trump name is still very much an asset and a big draw to people in Atlantic City," Ross said in the book.

The bondholders followed Ross' advice. They agreed that Trump would give up 50 percent of his casino. In return, he was given a better debt package and kept control of the business.

Trump later bundled his casinos into Trump Hotels and Casino Resorts, a publicly traded company. The public company filed for bankruptcy twice, in 2004 and 2009. Trump's involvement with the company ended shortly before the second bankruptcy. Trump also sued to have his name removed from two of the casinos in 2014.

Ross, who owns property near Trump's Mar-a-Lago resort in Florida, made another bet on Trump in 2016. When many other mainstream Republicans were worried about Trump's chances against Hillary Clinton in March that year, Ross was unequivocal in his support.

His support came with money and advice. He donated $435,000 to Trump, political groups backing Trump and to the Republican party on the state and national level. He also served as a key economic adviser to Trump, writing policy proposals on trade, energy policy and infrastructure.

Ross' bet on Trump's electoral gains paid off. Trump rewarded him with a Cabinet assignment where Ross serves as the country's chief business advocate, negotiates trade deals and plays a large part in developing the president's infrastructure plan.

He's also the lead negotiator on overhauling the North American Free Trade Agreement, a priority for President Trump, who has been a heavy critic of the deal.

The president has not spoken publicly about Ross' conflicts or his involvement with a shipping company that has links to Russia. Trump will eventually decide whether Ross, who's been a master at spotting distressed assets, has become one himself.

Jacob Steinberg and Andy Kruse contributed to this report.

Don't miss our next investigation

Enter your email below to receive notifications of new stories.