Wilbur Ross is likely to be confirmed as Donald Trump’s secretary of commerce on Monday despite unanswered questions about his ownership of a Cyprus bank that caters to wealthy Russians.
Ross, a wealthy business turnaround artist, has not responded to a Feb. 16 letter from six Democratic senators asking him to explain his relationship with several Russian oligarchs who hold stakes in the once-troubled foreign bank.
Ross’s involvement with the Cyprus bank adds to a list of Russia connections that have dogged Trump’s tenure in the White House. Investigations are underway by the FBI, the intelligence community and Congress into ties between Trump’s campaign and Russia’s plot to influence the U.S. election. The president has dismissed those suggestions as a “ruse.”
The Russian business and government elite have often sought financial security in the Mediterranean island’s banking system.
Ross, who turns 80 in November and was a Democrat for much of his life, is a billionaire who has turned around high-profile companies in the steel, coal, textiles and auto-parts sectors. His manufacturing acumen is more relevant to his appointment as commerce secretary.
More recently, he led a rescue of Bank of Cyprus in September 2014 after the Cypriot government — in consultation with Russian President Vladimir Putin — first propped up the institution.
“Cyprus banks have a long and painful history of laundering dirty money from Russians involved with corruption and criminality,” said Elise Bean, a former Senate investigator who specialized in combating money laundering and tax evasion. “Buying a Cyprus bank necessarily raises red flags about suspect deposits, high-risk clients and hidden activities.”
The Russian business and government elite have often sought financial security in the Mediterranean island’s banking system. Oligarch Dmitry Ryvoloviev took a nearly 10 percent stake in Bank of Cyprus in 2010. Two years earlier, amid the U.S. financial crisis when real-estate prices were softening, Ryvoloviev purchased Donald Trump’s Palm Beach mansion for $95 million. The transaction generated questions because of its inflated market price, about $60 million more than Trump had paid for the Florida property four years earlier.
When Europe’s debt crisis spread and affected Cyprus in 2012 and 2013, that nation’s second biggest bank, Laiki Bank, was closed. The government imposed losses on uninsured deposits, many belonging to Russians.
Six Democratic senators, led by Florida’s Bill Nelson, asked for details about his relationship with big Russian shareholders in Bank of Cyprus.
The Cypriot response was partly negotiated with Putin, who the Russian media said wanted to punish wealthy Russians who protected their fortunes abroad. A consortium led by Ross took a majority stake of 18 percent in September 2014. Ross now serves as vice chairman, a post he promised to resign when the Senate confirms him.
Ross had little history in global banking, but in 2011 he took an ownership stake in Bank of Ireland, the only bank in that nation the government didn’t seize. Ross tripled his investment when he sold his Irish stake in June 2014, then months later, he took a gamble on Bank of Cyprus.
Six Democratic senators, led by Florida’s Bill Nelson, asked for details about his relationship with big Russian shareholders in Bank of Cyprus, including Viktor Vekselberg, a longtime Putin ally, and Vladimir Strzhalkovsky, a former vice chairman of Bank of Cyprus and a former KGB agent believed to be a Putin associate.
Aides to several of the senators confirmed late Friday that Ross hadn’t responded to their questions. The White House sent McClatchy to a Commerce Department transition aide, who didn’t respond to questions.
Ross was involved with Russia during the 1990s when President Bill Clinton appointed him to serve on the U.S-Russia Investment Fund. The U.S. government set up an investment fund in 1995 to help push the new Russian nation toward a free-market economy after the Soviet Union collapsed.
The fund was converted to a nonprofit corporation in 2008 and many of its assets sold off. The banking investments were purchased by a subsidiary of German financial giant Deutsche Bank, led at the time by Josef Ackermann. Ross asked Ackermann to serve as chairman of the reconstituted Bank of Cyprus after his 2014 investment.
Ackermann left Deutsche Bank in 2012. The bank paid $7.2 billion in fines last year to the U.S. government over toxic mortgages it packaged and sold between 2005 and 2007. And last month, the bank agreed to pay almost $630 million to regulators in London and New York to end investigations into complex stock trades in Russia between 2011 and 2015.
Cyprus also features prominently in the Panama Papers, the massive leak of offshore company data from the Panamanian law firm Mossack Fonseca. Journalists from McClatchy and across the globe, working together under the umbrella of the International Consortium of Investigative Journalists, showed last year how politicians, kingpins and the wealthy all used shell companies to hide their money.
Many in Putin’s inner circle were tied to foreign shell companies that received payments through Russian Commercial Bank in Cyprus and other bank operations there. In fact, Cyprus appears more than half a million times in the roughly 11.5 million files that make up the Panama Papers.
David Goldstein in Washington contributed.