Wilbur Ross must be wondering whether it was ever worth getting involved in shipping. The US Commerce secretary’s investments came back to haunt him this week when he became the centre of a global media storm over seeming double standards in public life.
The 79-year-old former turnaround specialist — or asset stripper, depending on your political perspective — faced a barrage of criticism from opponents and calls for his resignation over his commercial ties with Russia.
The furore centred on LPG vessel owner Navigator Holdings, in which Ross owns a minority stake that makes him the largest shareholder, and its freight earnings from charters carrying products for Sibur, a large Russian gas processing and petrochemicals company with links to the Kremlin.
The details were uncovered in a huge leak of documents from offshore law firm Appleby that are part of the so-called "Paradise Papers", which reveal details of business dealings by wealthy people and institutions ranging from Ross to Britain’s Queen Elizabeth and trading firm Glencore.
They were obtained by Germany’s Suddeutsche Zeitung newspaper and shared with the International Consortium of Investigative Journalists (ICIJ) and widely reported.
It was not that the revelations about Ross were not already in the public domain, however. Far from it. The stake in Navigator was known because of its status as a public company, as well as its relationship with Sibur, which it had been declared due to the commercial risks.
Ross’ stake was also included in the 57-page public financial disclosure report filed in December, before he officially joined the Trump administration.
And while he was asked at his confirmation hearing in January about his decision to retain an interest in Diamond S Shipping, which operates 33 product tankers, US lawmakers did not probe the implications of his stake in Navigator.
None of that matters, and nor should it. And those who argue otherwise are naive in the extreme.
When Ross took his government position he should have known that several investors and directors in Sibur were under US economic sanctions, including Putin’s son-in-law Kirill Shamalov and former Gunvor co-owner Gennady Timchenko.
Whether or not Ross expected or hoped those sanctions would be lifted under Trump’s warmer relationship with Russia is not known. But the sanctions were, and indeed remain, in place.
Daniel Fried, a former foreign affairs adviser to president George W Bush said Ross’ links to “cronies of Putin” threatened to undermine US sanctions.
“I don’t understand why anybody would decide to maintain this kind of relationship going into a senior government position. What is he thinking?”
Ross has subsequently declared he is completing the sale of his stakes in both companies.
It then only got worse later in the week when US business magazine Forbes stripped Ross of billionaire status in its flagship rich list, where he had been a fixture since 2004. Not just was his estimated wealth downgraded from $2.9bn, Forbes accused Ross of lying about assets he says are held in trust for his children.
Again this was despite it being a matter of public record that he declared his worth at a mere $700m during the process of joining the Trump cabinet.
Ross was not the only major shipping name entangled in the row sparked by the Paradise Papers leak. SwissMarine was forced to defend itself over what it said was a clerical error in not declaring Victor Restis was a director at a time when he was in jail over fraud allegations which were later dropped.
Details were also leaked of Glencore’s eye-catching 47.1% stake in SwissMarine, which forced Glencore to declare bluntly: “For commercial reason’s Glencore’s investment in SwissMarine was not widely disclosed.”
In the face of such leaks and public opprobrium it is futile for companies or individuals to bleat that they have been treated unfairly. If politicians, business people or corporate entities wish to be treated with respect then they must live up to the standards that society sets.
When they do not, or worse, when they have been disingenuous or even downright deceitful then they must expect law makers and regulators to respond to the resulting public anger and impose added restrictions or demands for even greater transparency.
The Paradise Papers highlight how reputational risk is not just for those who choose to place themselves in the public spotlight. It is for those who remain in the world of private business too.
And that has huge implications for the need for higher ethical standards in every part of the shipping business. In the 21st century, increasingly there will no hiding place.
