Secretary of Commerce Wilbur Ross was named in the Paradise Papers leak for his investments in Russian companies. (Olivier Douliery/Abaca Press/TNS)

Secretary of Commerce Wilbur Ross was named in the Paradise Papers leak for his investments in Russian companies. (Olivier Douliery/Abaca Press/TNS)

Commerce secretary’s financial ties to Putin allies draw scrutiny

Commerce Secretary Wilbur Ross came under sharp scrutiny Monday for holding investments in Russian companies tied to President Vladimir Putin’s inner circle, creating fresh problems for President Donald Trump as he battles widening investigations into his aides’ contacts and business deals with Russian officials.

Millions of documents leaked from a Bermuda-based law firm revealed that Ross used offshore investments in the Cayman Islands to own a stake in Navigator Holdings Ltd., an international shipping company that does about $68 million in business annually with a Russian gas and petrochemical company called Sibur.

Sibur’s largest investors include Kirill Shamalov, Putin’s son-in-law, and Gennady Timchenko, who is under U.S. economic sanctions for his role in the Russian annexation of Crimea. The Treasury Department has described Timchenko as part of Putin’s inner circle.

Sibur’s largest stakeholder is Leonid Mikhelson, said to be Russia’s richest man. His company, Novatek, is under U.S. sanctions. Three of Timchenko’s other companies are also under U.S. sanctions.

Although Sibur itself is not under sanctions, Ross’ links to Putin’s allies through his offshore investments drew sharp criticism from some Democrats on Capitol Hill and government ethics groups. They questioned how Ross can represent an administration that imposes economic sanctions on Russian companies and individuals — and also do business with them through another company.

“Sanctions are a joke when our own Commerce secretary makes money from trading with the Russians,” said Richard Painter, vice chairman of the watchdog group Citizens for Responsibility and Ethics in Washington.

Ross said he had done nothing wrong because he disclosed his holdings in the Cayman Islands companies after President Trump nominated him to run the Commerce Department.

“This would have been something not good had it not been disclosed, but it has been quite fulsomely disclosed,” Ross said.

He said U.S. ethics officials who inspected his investments and business holdings did not ask him to sell his stake in Navigator, which is incorporated in the Marshall Islands, an island nation in the central Pacific. Ross, a private equity billionaire, divested numerous other business assets when he joined the administration.

Ross’ aides said he had never met the three Russians with major stakes in Sibur, and that he recuses himself from trans-oceanic shipping issues in government. They also said that because the sanctions targeted Timchenko as an individual and not Sibur, the company, it was not illegal to do business with it.

Ross’ business entanglements emerged in documents obtained by the International Consortium of Investigative Journalists and the German newspaper Suddeutsche Zeitung. They attributed more than 13 million documents to the Bermuda-based law firm, Appleby, and two connected companies.

Numerous news organizations reviewed the documents, dubbed the Paradise Papers, and published reports Monday. The Times is not a member of the consortium and did not review the material.

Like last year’s Panama Papers, the latest trove shows how some of the world’s wealthiest people hide money and business dealings through murky offshore accounts and companies. Doing so is not inherently illegal, but the practice can be used to avoid taxes or launder ill-gotten funds.

Last week, Trump’s former campaign manager, Paul Manafort, and his chief deputy, Richard Gates, were indicted on a dozen charges of fraud, conspiracy and money laundering for allegedly hiding $75 million in scores of foreign accounts and shell companies, and moving about $18 million into the U.S. without paying taxes on the income. They have pleaded not guilty.

The latest revelations may deepen trouble for Jared Kushner, Trump’s son-in-law and a senior advisor, who has appeared before congressional committees investigating his meetings with Russian officials during the campaign.

According to the leaked documents, Kushner also had dealings with Yuri Milner, a Russian billionaire with large investments in Facebook, Twitter and other companies, including Cadre, a firm co-founded by Kushner. Milner’s investments in U.S. social media was provided through the financial arm of Russia’s state-owned oil and gas company, according to the documents.

Others named in the Paradise Papers reports include Queen Elizabeth, said to have squirreled away millions of dollars in Caribbean tax havens; U.S. companies from Nike to Uber; a former prime minister of Pakistan, Shaukat Aziz; and the chief fundraiser for Canadian Prime Minister Justin Trudeau.

The documents also indicate that Secretary of State Rex Tillerson and Trump’s top economic advisor, Gary Cohn, have investments in Bermuda-based companies, the New York Times reported. It said neither official was implicated in illegal activity.

Monday was a government holiday in Russia, and the Kremlin was silent about the disclosures. Sibur said in a statement that it was surprised by the “politically biased treatment” of the company in news accounts. It described its dealings with Navigator as “ordinary commercial activities.”

Ross’ staff said he is generally supportive of U.S. sanctions against Moscow, which were first imposed after Putin’s forces intervened in Ukraine in 2013, and then increased last year because of Russian meddling in the U.S. election. Congress recently voted overwhelmingly to add more sanctions.

Trump has repeatedly vowed to improve relations with Putin. They are expected to meet this week on the sidelines of a regional summit in Vietnam, one of five countries Trump is visiting in Asia.

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