Ross’ key responsibility right now: serving as one of Trump’s top lieutenants in the ongoing trade war between the two largest economies in the world, the United States and China. Long before Ross entered the U.S. government, he was already doing business alongside the Chinese government, directing $100 million of his investors’ money into a 2009 initial public offering for a wind-power producer called Longyuan Power.
It wasn’t the sort of investment that Ross’ firm, bankruptcy specialist WL Ross, was known for. In business terms, an IPO is about as far away from bankruptcy as you can get. But according to four former WL Ross employees, Ross’ main reason for investing in Longyuan Power was not earning a return. “That investment was made solely to curry favor with the Chinese and a big state Chinese investment fund,” says one of Ross’ former colleagues.
Specifically, Ross hoped to entice a sovereign wealth fund named China Investment Corp. into dumping money in another fund of his, according to the former employees. The more the state entity put in the later fund, the more Ross could collect in fees and incentives. It appeared to be a strategic play: Ross could bet other people’s money on a questionable IPO now to grab more money for himself down the road. Ultimately, the future secretary of commerce raised $500 million from the Chinese fund, according to two of the former colleagues. The investment in Longyuan Power dropped from $100 million to $90 million before WL Ross sold it. In a statement, a spokesperson for Ross called the allegations surrounding Longyuan Power “silly and untrue.”
Armed with cash from the Chinese, Ross dumped millions into Diamond S Shipping, which owns 45 vessels around the world, making him business partners with the Chinese government. Despite that connection, Ross initially told the Office of Government Ethics that he planned to hold on to his stake in the business. That prompted questions during his confirmation hearing about how Ross’ interest in the shipping business might overlap with his responsibilities as a member of the cabinet. Despite internal WL Ross documents that note how globalization, the bogeyman in virtually all Trump administration trade negotiations, drives the success of Diamond S Shipping, Ross brushed off the concerns. “The research we’ve done suggests that there has never been a shipping case come before the Department of Commerce,” he told the senators. He did not mention that his business partner in the venture was the Chinese government. In November, a spokesman for Ross told the Center for Public Integrity that the secretary of commerce voluntarily divested from Diamond S Shipping. But in “divesting,” Ross apparently handed over an interest in the business to his family.
