Commerce Secretary Good At Napping, Bad At Math

Wilbur Ross may be carrying a few too many ones when calculating his net worth and his p.e. firm's fees.
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If there’s one thing you should know about Wilbur Ross, the former private equity titan now serving in the U.S. Cabinet, it’s that he’s 80 years old. That means he’s always ready to ready to rest his eyes a little. Whether he actually dozes or not at some important international summit or presidential address to Congress, he is always prepared when the sheep come a callin’.

WilburRoss.Rancy

It also means he can be a little forgetful at times, especially times when it is personally useful for him to be forgetful. Like about that giant stake in a company that does a giant amount of business with a giant Russian petrochemical operation whose co-owner just happens to be one of the first people sanctioned by the U.S. government over the whole Russia invading and annexing the Crimea thing. No matter, though: Ross has never met any of those people and recuses himself “from matters focused on transoceanic shipping vessels.” Plus, he was perfectly transparent about his broad and deep business ties in China when he made clear he wouldn’t be cutting or really changing them in any way, so what’s the big deal?

In a related matter, he’s also not great with numbers. For instance, his status as a member of the Trump Cabinet’s billionaires club was based on a small order-of-magnitude-level rounding error, apparently.

Forbes had listed his net worth at $2.9 billion on The Forbes 400, a number Ross claimed was far too low: He maintained he was closer to $3.7 billion. Now, after examining the financial-disclosure forms he filed after his nomination to President Donald Trump's Cabinet, which showed less than $700 million in assets, Forbes was intent on removing him entirely.

The Bloomberg Billionaires Index lowered its net worth calculation for U.S. Commerce Secretary Wilbur Ross to $860 million from $3 billion after determining that figures he provided couldn’t be independently verified.

It doesn’t stop with his own net worth, however. According to three former colleagues at Ross’ eponymous p.e. firm, he was also a tad careless when calculating the fees charged to general partnerships they were required to invest in.

The plaintiffs said WL Ross reaped at least $48 million in management fees from the general partnerships that were “completely concealed” until the firm disclosed them on capital statements last year….

Records included in the lawsuit show Mr. Storper questioning why WL Ross funds paid management fees that he said exceeded in some cases the amount of the overall general partnership investment in the funds. One fund, WLR Recovery Associates II LLC, paid $4.8 million in management fees, more than its $3.9 million general partnership investment, according to his estimates.

WL Ross collected $32 million in management fees from another fund, WLR Recovery Associates IV LLC, compared with a $25 million general partnership investment by Invesco and some of its employees, Mr. Storper wrote.

Ross was too busy battling the snooze button to comment, but his old firm saw no problem in charging 125% in management fees.

A senior managing director at WL Ross said in an October email that the management-fee calculations had been fully audited “and no issues were noted,” according to court records.

We’re sure this all bodes well for the NAFTA talks.

Wilbur Ross Sued Over Fees By Firm’s Former Executives [WSJ]
The Case Of Wilbur Ross’ Phantom $2 Billion [Forbes]
We’re Cutting Our Calculation of Wilbur Ross’s Net Worth to $860 Million [Bloomberg]

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