Wilbur Ross Remained on Chinese Joint Venture Board While Running U.S.-China Trade War
Wilbur Ross, an investor-turned-U.S. commerce secretary, has long been accused of ethical violations because of his failure to extricate himself from his business ties. Documents obtained by Foreign Policy show that Ross’s potential conflicts of interest around Chinese business are greater than previously known.
In Chinese corporate documents obtained by Foreign Policy, Ross is listed as serving on the board of a Chinese joint venture until January 2019—nearly two years into his term as commerce secretary. That joint venture, now called Huaneng Invesco WLR (Beijing) Investment Fund Management Co., is an investment partnership formed in September 2008 between Huaneng Capital Services, the U.S. management company Invesco, and a firm Ross founded, WL Ross & Co. Huaneng Capital Services is an arm of China Huaneng Group, a major state-owned power producer.
The documents correspond to the information found on Chinese corporate data sites, such as Qichacha and Qixinbao, including the dates of board membership. The documents don’t say if Ross was paid for his board seat or whether there is any current financial relationship between Ross and the joint venture. It’s also unclear if Ross knew that he remained on the board seat: The more recent documents don’t include the signatures or seals of the individual board members. That Chinese documents state Ross was on the board of a Chinese joint venture until 2019 has not been previously reported.
The U.S.-China trade war started heating up in the summer of 2018, as Beijing and Washington levied increasingly onerous tariffs on each other. At the same time as Ross was overseeing the trade war as U.S. commerce secretary, he was still, according to the paperwork, on the board of a joint venture that was a partnership with a Chinese stateowned firm. “Instead of reporting on well-documented facts, including a dated and signed letter of resignation that I provided them, Foreign Policy Magazine is purporting a false narrative that I remained on the board of a Chinese company, citing Chinese documentation,” Ross replied in a statement sent by the U.S. Commerce Department. “It is clear which foreign policies Foreign Policy Magazine actually support and the
American public deserves better.”
The letter that Ross provided to Foreign Policy is dated Feb. 27, 2017, marked “Confidential,” and has as its subject line “Re: Resignation from WLR Entities.” In the letter, addressed to WL Ross & Co., Ross writes that he “shall be deemed to have retired, resigned or withdrawn” from every entity affiliated with WL Ross & Co. Ross lists dozens of companies that he claims the letter applies to, including those affiliated with Huaneng. But Chinese corporate law experts consulted by Foreign Policy say that under Chinese law, writing a private letter to a U.S. parent company does not remove one from Chinese corporate boards. (Invesco, which owns WL Ross & Co., declined to comment for this story.) “The failure to withdraw from the board may have just been an inadvertent slip, but what you said is clearly not a ‘false narrative,’” said Fred Rocafort, an attorney at the international law firm Harris Bricken. “Chinese corporate records establish, without a doubt, that he was officially on the board until February 1, 2019.”
Ross’s position as commerce secretary allowed him to influence the direction of the U.S.-China trade war and America’s global trade policies. While there is no evidence that Ross directly benefited from the joint venture while serving as commerce secretary, entanglements like this have traditionally been seen as potential violations of the national interest. “Public trust demands that all employees act in the public’s interest, and are free from any actual or perceived conflicts when fulfilling the governmental responsibilities entrusted to them,” the then-acting director of the U.S. Office of Government Ethics wrote to Ross in a July 2018 letter, about other inadvertent ethical violations.
On March 20, 2017, less than a month after Ross was confirmed as commerce secretary, the joint venture entered into a partnership with the parent company Huaneng and Taikang Assets Management Co., a subsidiary of the major Chinese insurance firm Taikang. The companies agreed to raise 5 billion RMB ($745 million) to invest in renewable energy projects—a market that Ross had influence over at the Commerce Department and which was directly affected by trade tariffs. Ross’s relationship to the Taikang partnership has not been previously reported. (Taikang Assets and Huaneng didn’t respond to requests for comment. A representative of the Huaneng joint venture, Catherine Han, didn’t respond to requests for comment.)
One set of documents that Foreign Policy obtained, dated March 2018, show that the joint venture filed paperwork stating which of its previous board members would continue to serve on the board. Ross’s name is on that list. Another document, from January 2019, removes Ross from the board and appoints the investor Nadim Qureshi as a new board member. Qureshi served on the board until September 2020. (At the time, Qureshi was a managing partner at WL Ross & Co., according to his LinkedIn profile; he didn’t respond to a request for comment.) The joint venture affixed its seal to the document. Under Chinese law, a seal is generally seen as more official than a signature.
Ross attended a board meeting in September 2012 and signed an agreement with other directors to, among other changes, increase the company’s registered capital to 170 million RMB ($25 million) and its total investment to 510 million RMB ($76 million) and to change the name of the joint venture from Huaneng Invesco WLR Investment Consulting Co. to its current name.
Long bullish about investing in China, Ross and his firm WL Ross & Co., along with Invesco, formed the joint venture to “tap into private equity investments in power generation in China,” the firm said in a 2008 press release. In 2000, Ross founded the private equity firm WL Ross & Co., which focused on distressed assets. He sold the firm to the money manager Amvescap (now Invesco) in 2006.
Ross continued serving as the CEO of Invesco’s private equity groups until joining the government in February 2017. But Ross only sold his shares in Invesco in December 2017 —nearly a year into his tenure as commerce secretary. He was supposed to sell his shares, valued between $10 million and $50 million, before the end of May 2017. But the nonprofit Center for Public Integrity found that, because Invesco’s stock rose in the meantime, the delay netted Ross between $1.2 million and $6 million. “I discovered that the previously held stock had not been sold. I then promptly sold these shares,” he later wrote in a disclosure.
Ross has been repeatedly warned about ethics violations. In his December 2016 ethics disclosure forms, Ross disclosed that he was on the board of the Huaneng joint venture, from 2008 until “present.” In March 2018, the nonprofit liberal advocacy group Public Citizen released a report titled “Follow the Money: Did Administration Officials’ Financial Entanglements with China Delay Trump’s Promised Tough-on-China Trade Policy?” The report discusses many of Ross’s alleged conflicts of interest with China, including his relationship with Diamond S Shipping, a Connecticut-headquartered firm that at the time was partially owned by the Chinese government. The report also mentions Ross’s relationship with Huaneng. (In a September 2019 interview with the Washington Post, Ross denied ever having any conflicts of interest while in government.)
In July 2018, the Office of Government Ethics wrote a scathing public letter to Ross, criticizing him for “various omissions and inaccurate statements” in his disclosure forms and compliance documents. “[E]ven inadvertent errors regarding compliance with your ethical obligations can undermine public trust in both you and the overall ethics program,” the letter states. In response, Ross filed an extensive annual financial disclosure report for that year. In February 2019, the director of the Office of Government Ethics refused to certify the report because Ross didn’t sell all his shares in the Florida-based bank BankUnited.
But there was another possible error in Ross’s 2018 financial disclosure report. In the report, Ross claims that he had left the Huaneng joint venture in February 2017. But according to Chinese law, he was still a director of the joint venture until 2019. This error, however inadvertent, on Ross’s financial disclosure report has not been previously reported.
Having close ties with the Chinese Communist Party (CCP) is seen as a requisite for succeeding in private equity in China, especially in the power sector, which is dominated by well-connected state-owned firms. For example, Li Xiaopeng, the son of former Chinese Premier Li Peng, ran Huaneng from 1999 until the summer of 2008, when he left to become vice governor of the province of Shanxi. He’s now China’s transportation minister. Of the five other people who the documents show served on the board with Ross from 2018 to 2019, at least two are members of the CCP, according to their bios on a Chinese corporate registry site.
Invesco’s press release about the joint venture has been removed from its website, but it’s still available on the Wayback Machine, a nonprofit digital web archive. “This unique collaboration,” Ross said in the release, benefits from the “skillsets and relationships of a powerful Chinese partner, one of the largest state-owned enterprises.” And it represents, he added, “living proof of the financial and intellectual interconnectedness of two of the world’s great powers, China and the United States.”
Isaac Stone Fish is a journalist and senior fellow at the Asia Society’s Center on U.S-China Relations. He was formerly the Asia editor at Foreign Policy Magazine. Twitter: @isaacstonefish