Paradise Papers bring US Commerce Secretary under scrutiny

By Rutvi Saxena

US Commerce Secretary Wilbur Ross has come under public scrutiny for having business ties with a company linked to Russian President Vladimir Putin’s family. Ross, a billionaire investor, holds a substantial number of shares in Navigator Holdings, an international company that ships Liquefied Petroleum Gas (LPG).

The Paradise Papers and connections with Sibur

One of its primary clients is Sibur, a Russia-based gas and petrochemicals company, whose shareholders include Gennady Timchenko, Kirill Shamolov and Leonid Mikhelson. Timchenko (individually) and Mikhelson (through his company Novatek) old friends of Vladimir Putin who are subject to US Sanctions. Shamolov is the President’s son-in-law and although he is not under a sanction himself, his father Nikolai is.

The connection was brought to light in the ‘Paradise Papers’, a trove of millions of documents regarding offshore finances of celebrities, corporate giants and businessmen, and how they evaded tax by increasingly innovative means. Most of these were leaked by Appleby, an offshore legal service provider to the German newspaper Süddeutsche Zeitung. These were then shared with the International Consortium of Investigative Journalists (ICIJ) and its media partners. The subsequent reports garnered worldwide attention. Wilbur Ross has claimed that he had disclosed the information beforehand and that there is “nothing improper” about his ties, especially since he has not met any of the mentioned men.

Tracing Russia-US links

Rumours of Russian interference began to make rounds during the presidential elections of 2016. It was also believed that Russian forces were infiltrating the States’ cyber network and using social media to promote Trump over other candidates. A joint statement was issued by the Department of Home land Security and Office of the Director of National Intelligence on Election Security, accusing the Russian Government of “directing the
recent compromises of e-mails from US persons and institutions, including from US political organisations…intended to interfere with the US election process.” Reports of hidden Russia-Trump links have continued to make headlines since then.

Conflict of interest

A conflict of duties of Ross with trade and industry was called into account, to which James Rockas, Ross’ press secretary said, “Secretary Ross recuses himself from any matters focused on transoceanic shipping vessels.” The arrangement has been questioned by various political analysts. Daniel Fried, who oversaw the introduction of US sanctions against Russia under President Barack Obama said that it would be a mistake for any American official to do business with Sibur. “I don’t understand why anybody would decide to maintain this kind of relationship going into a senior government position,” he said. Democrat Senator Richard Blumenthal went as far as to say, “Our committee was misled, the American people were misled by the concealment of those companies.”

“It was a normal commercial relationship”

Although not strictly illegal, Ross’ actions have been called into question on ethical grounds. In his list to the ethics official of the Commerce Department, Ross created two lists: companies he intended to divest from and those he intended to retain. Four companies in the latter were valued between $2.05 million and $10.1 million. These are, in turn, linked through ownership chains to two other establishments WLR Recovery Fund IV DSS AIV L.P. and WLR Recovery Fund V DSS AIV L.P. They were not declared in the holdings he would keep, though Ross listed them in his financial disclosure prior to his confirmation.

Ross denied any wrongdoing on his part since the company was not under sanction itself. “A company not under sanction is just like any other company, period. It was a normal commercial relationship and one that I had nothing to do with the creation of, and do not know the shareholders who were apparently sanctioned at some later point in time… It was disclosed on Form 278 which is the financial disclosure form, in my case, three times,” Ross was quoted as saying. The U.S. Department of Commerce said in a statement that Ross “was not involved with Navigator’s decision to engage in business with Sibur, a publicly-traded company, which was not under sanction at the time and is not currently,” and that the holdings are openly listed on the Office of Government Ethics website.

However, if the present situation is anything to go by, the people are yet to see the complete picture behind the government’s intentions. The Presidents of both the countries are also being held answerable for their unrevealed policies.

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