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.

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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 filing with the Securities and Exchange Commission.

And one of Diamond S Shipping’s main customers recently acquired a stake in a Russian national oil company.

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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.

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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.”

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Beginnings

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 investors that 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.

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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.

Diamond S Shipping Group’s SEC filings detail the company’s ownership structure, which involves a series of subsidiaries.

Here’s how the business works:

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The company cuts deals to allow customers, so-called charterers, to use specific vessels for specific lengths of time.

According to the 2014 SEC filing, 30 out of 33 product tankers in its fleet were signed to longer-term “time” charters, contracts that can lock in a rate for years.

In some cases, Diamond S Shipping negotiated profit-sharing deals allowing it to receive a pre-determined percentage of profits on especially lucrative voyages.

The SEC filing also said Diamond S Shipping vessels aren’t necessarily prohibited from calling in locales where sanctions and embargoes apply. In the filing, the company said it believed it was in compliance with all applicable sanctions, embargoes, laws and regulations.

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In a statement to the Center for Public Integrity, the company said its “charter agreements expressly require compliance with all applicable laws, specifically prohibit trading in violation of applicable U.S. or EU sanctions.” The company added that isn’t aware of any instances when its charterers have violated any applicable laws.

Strange bedfellows?

Diamond S Shipping, to be sure, does represent only a small part of Ross’ wealth.

Ross, 79, is sometimes known as the “king of bankruptcy” for his history of investing in ailing companies. And he stands out, even on Trump’s gold-leafed roster of wealthy Cabinet members, as a business titan at least as successful as Trump himself.

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Although Ross agreed to divest the vast majority of his assets to take the job heading commerce, the financial disclosure he filed with federal regulators lists numerous opaque offshore entities that make it nearly impossible to independently ascertain all the underlying assets and all his business partners.

The Commerce Department traditionally plays a role in trade negotiations, handling trade enforcement and promoting U.S. exports, among a grab bag of other duties that includes administering the U.S. Census and conducting oceanic research.

As Trump’s Commerce secretary, Ross will have an even larger role in shaping U.S. trade policy than usual.

"Mr. Ross not only has negotiated some very good deals over his lifetime, he's also the person who worked closely with the president-elect on crafting his trade policy," Jason Miller, a Trump transition spokesman, said in December. "Mr. Ross will be playing a big role in any trade particulars in this administration."

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In response to questions during his confirmation hearing about his role on trade policy, Ross said he expects to work collaboratively with the yet-to-be-confirmed U.S. trade representative, traditionally the administration’s lead person on trade, and Peter Navarro, the director of the National Trade Council. Together, they will work “to bring all the intellectual resources and experience that we can” to trade policy, Ross said.

Ross said renegotiating the North American Free Trade Agreement would be a priority.

But among all the investments Trump’s commerce secretary could hold, an interest in a transoceanic shipping company is perhaps the most incongruous given Trump’s decidedly protectionist trade agenda.

Trump regularly bashes a handful of foreign countries as enemies of America’s financial or national security interests.

In a 2015 book released during his presidential campaign, Trump wrote: “There are people who wish I wouldn’t refer to China as our enemy. But that’s exactly what they are.”

China, Trump continues, has cost the United States tens of thousands of jobs. Ross himself has called China “the most protectionist of the large countries” and signaled during his confirmation hearing that he would push China on free trade.

“We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs,” Trump declared in his inaugural speech.

Vessels belonging to Diamond S Shipping, meanwhile, do business in countries Trump has singled out, along with scores of other countries that will be affected by the U.S. trade policy Ross is shaping, according to a Center for Public Integrity review of maritime incident reports and an analysis of data provided by MarineTraffic, a global ship tracking intelligence provider.

For instance, the company’s vessels have made more than 100 visits to China since 2012, MarineTraffic data indicate.

Diamond S Shipping’s operations would also appear to conflict with another provision of Trump’s agenda, his “America First” mantra.

Of Diamond S Shipping’s 45 tankers, 32 are registered in Hong Kong. The rest are flagged in the Marshall Islands and Malta.

“The main reason for flagging in another country is that you then don’t have to pay people the rates that you would have to pay U.S. workers,” said Martin Davies, director of Tulane University Law School’s Maritime Law Center and an international expert in maritime law.

Sailing to Iran

Trump considers Iran a hotbed of terrorism and threat to Americans.

But MarineTraffic’s data and a Hong Kong maritime authority report show one of the tankers owned by Ross-backed Diamond S Shipping, the Alpine Maya, visited the Iranian port of Bandar Abbas in early 2014, a time when the U.S. government’s sanctions against Iran were in full force. It was carrying soybean oil, according to the report.

Diamond S Shipping told the Center for Public Integrity the 2014 voyage by the Alpine Maya was legal.

Entities sanctioned by the United States include Tidewater Middle East Co., a company that managed several major Iranian ports, including, at that time, much of Bandar Abbas, though that has since changed. The U.S. government said it imposed the sanctions because of Tidewater’s relationship with the Islamic Revolutionary Guard, which the U.S. government alleges is linked to weapons proliferation and Iran’s support for terrorism.

To be sure, Trump’s own organization once rented space in a Manhattan high-rise to Bank Melli, a state-controlled Iranian bank that the U.S. government says helped fund the Islamic Revolutionary Guard, as the Center for Public Integrity and International Consortium of Investigative Journalists reported in October.

Sanctions are an extraordinarily complex area of both policy and law, and there have long been provisions providing legal routes for the export of certain kinds of products and goods to Iran, including many agricultural products.

But lawyers who specialize in dealing with U.S. sanctions said using the Bandar Abbas port in 2014 required extensive due diligence.

“Basically, I would say, if it was not prohibited it was certainly very high risk” because of the need to confirm there were no dealings with sanctioned parties, said Farhad Alavi, a lawyer who specializes in complex trade issues and works with the Akrivis Law Group.

“What you saw during the peak of the sanctions … a lot of shipping companies were backing out of Iran and the reason was, in part, because of this whole issue of the Revolutionary Guard potentially operating a lot of Iranian ports,” Alavi said. “More importantly I think it was the fear of getting near anything that was sanctions related.”

Erich Ferrari, another lawyer with a specialty in sanctions-related work, said that if someone asked for his advice about using the Bandar Abbas port in April 2014, “I would have said no, because at that time, it was known Tidewater was the port operator of Bandar Abbas. You can’t do it, or you have to show us Tidewater won’t be involved in any way shape or form in this transaction.”

Adam M. Smith, a Gibson, Dunn & Crutcher partner who previously worked for the U.S. Treasury’s Office of Foreign Assets Control, which oversees sanctions, said many berths at Bandar Abbas were controlled by Tidewater.

“There are certain questions I would want answered before giving it the green light,” he said.

In response to the Center for Public Integrity’s questions about the Iran voyage, Diamond S Shipping said the customer that chartered the Alpine Maya at the time had a license from the U.S. Treasury “authorizing the export of the product to specific end-users in Iran.”

“At the time that Diamond S Shipping was made aware by the charterer that the voyage was to Iranian waters, Diamond S Shipping conducted diligence and conferred with counsel to confirm that the voyage complied with applicable laws. Diamond S Shipping also obtained express certifications from the charterer that the voyage complied with all applicable sanctions,” the company said in an emailed statement.

Connections to a Russia deal

Russia’s alleged influence on the Trump administration is being hotly debated on multiple fronts in Washington, and the FBI is looking into whether anyone associated with Trump’s campaign coordinated with Russian operatives.

Diamond S Shipping’s business relies heavily on a handful of customers, including Glencore PLC, whose deal to invest in Russian national oil company Rosneft has drawn scrutiny from American and European regulators.

In December 2016, Swiss-based commodities giant Glencore announced it would join with Qatar’s sovereign wealth fund to buy a 19.5 percent stake in Rosneft. The deal marked the biggest foreign investment in Russia since the United States and the European Union imposed sanctions in 2014 because of the country’s military occupation of Ukraine’s Crimea region.

Glencore provided more than 10 percent of Diamond S Shipping’s revenue during the fiscal year that ended March 31, 2013, according to the company’s SEC filing.

The deal reportedly gives Glencore a new supply deal for Russian crude oil.

A Glencore spokesman, Charles Watenphul, referred the Center to Public Integrity to previous statements by the company saying its investment in Rosneft is in compliance with all applicable sanctions. Sanctions permit Rosneft to sell oil. Watenphul also noted that Glencore is one of the largest charterers of oil tankers in the world and works with many tanker owners and operators, not just Diamond S Shipping.

MarineTraffic data show the company’s vessels have made more than 30 visits to Russia since 2012.

"Rosneft is a sanctioned entity and therefore we have to look at how they're going to provide the financing," Amos Hochstein, U.S. special envoy for international energy affairs, said in December. Hochstein told Bloomberg any review of the deal would "be more about the financing side."

Asked if the deal violated the spirit of the sanctions, Hochstein said, "Clearly this is not what we were hoping for when we implemented sanctions."

The State Department did not respond on the record to a Center for Public Integrity question about the status of the review.

Holding on

Ross said during his commerce secretary confirmation hearing that he was keeping his Diamond S Shipping holdings, even as he won praise from lawmakers of both parties for agreeing to shed “hundreds of millions of dollars” in other assets and investments to avoid conflicts of interest.

Rockas, the Commerce Department spokesman, told the Center for Public Integrity that Ross has “resigned from all positions from which he agreed to resign.” Ross had been non-executive chairman of Diamond S Shipping's board, according to its SEC filing.

Ross testified before senators that keeping his stake in Diamond S Shipping doesn’t create a conflict.

“The research we've done suggests that there has never been a shipping case come before the Department of Commerce,” Ross said, adding, “We don't take any risk in the cargo. We simply are like a taxi cab: They put cargo, we discharge it in another location, and we're paid a fee for so doing.”

Ross said he would be “quite scrupulous” in recusing himself in any situation with even “the slightest scintilla of doubt.”

According to his ethics agreement, he “will not participate personally and substantially in any particular matter in which I know that I have a financial interest directly and predictably affected by the matter, or in which I know that a person whose interests are imputed to me has a financial interest directly and predictably affected by the matter,” unless he receives a waiver or exemption allowing him to do so.

But such recusals do have limits, Ross indicated.

When Sen. Maria Cantwell, D-Wash., asked Ross to clarify whether he would recuse himself from a lengthy list of Commerce Department duties, including oil spill monitoring and risk management, Ross replied in writing that he “cannot undertake the broad and preemptive recusal that you propose.”

Instead, Ross said, he would recuse himself from any matter involving a vessel associated with Diamond S Shipping, and would “rely on the monitoring and judgment of the Department’s ethics officials to ensure that I do not participate in any matter about which they advise me that a conflict of interest would arise.”

Ross has not publicly addressed how he will handle issues involving major customers of Diamond S Shipping. One big Diamond S Shipping customer, Maersk, an international company based in Denmark, has lobbied the Commerce Department on maritime issues and port efficiency.

Ross has suggested international shipping issues won’t be completely out of his purview.

“Mexico has 44 treaties with other countries that make it very advantageous to do international shipping from Mexico rather than from the United States,” Ross said during an interview on CNBC in November, after Trump had indicated he would get the commerce secretary job. “Believe it or not, Mexico has better treaties with the rest of the world than the United States has. We’re going to fix that.”

Fitton, the Judicial Watch president, said “it’s to Mr. Ross’ credit that he took the job despite the hit he’d be taking personally and financially.”

Fitton said Ross should seek ethics advice and recuse himself “if there were a specific discussion of a shipping issue per se that had a direct and predictable outcome on his firm.”

But Painter, the former Bush administration ethics lawyer, said he believes Ross must recuse himself widely from Commerce Department business that potentially affects demand for Diamond S Shipping’s ships or influences the company’s finances, including broad trade negotiations.

The possible need for recusal is a shame, Painter said, because Ross understands the economy. “We need him to be involved in trade negotiations to bring some sense to this administration,” he said.

Norman Eisen, former chief ethics lawyer during the Barack Obama administration, called it a “challenging situation” because Ross’ shipping investment is “so closely related to critical issues in his official portfolio.”

For now, Ross is settling into his new job.

He was easily confirmed by the Senate in a vote of 72-27 on Feb. 27.

The next evening, Ross attended Trump’s speech to Congress. He strode in sporting a pair of $500 slippers.

On the customized footwear: the Commerce Department logo. It features a sailing ship.

The Center for Public Integrity is a nonprofit, nonpartisan investigative news organization in Washington, D.C.