Deep and personal: Why Wilbur Ross hates Indian business regulations

US Commerce Secretary Wilbur Ross criticises high tariffs and market access barriers before Indian officials, make a departure from polite diplomacy.

US Commerce Secretary Wilbur Ross stayed in India for just two days. But apart from hogging headlines by hitting out at India repeatedly, the hardline Trump Cabinet member also convinced Indian trade negotiators that recent trade spats with the US will take a long time to resolve.

During his visit, Ross met both Commerce and Industry Minister Suresh Prabhu and Prime Minister Narendra Modi, raising the issue of high tariffs and market access barriers, a pet peeve of the Trump Administration. However, he spent most of the visit training his guns on regulatory challenges in India, calling them “unnecessarily complex and discriminatory”. The comments have sparked a debate, marking a rare departure from previous bilateral visits when senior US government figures had complimented the Modi regime for augmenting ease of doing business and opening up a majority of the sectors to foreign direct investment.

However, the 81-year-old investor’s chagrin with strict regulations is well known. In India, Ross has had a personal run-in with government regulations more than a decade back. Back in 2008, Ross had been a key investor in domestic carrier SpiceJet, buying up more than a third of all shares at an estimated $80 million. However, sensing the difficulties ahead for the company, at a time when the sector was weighed down by chronic oversupply and high costs, WL Ross & Co. — the billionaire’s private equity investment firm — sold his 30 per cent stake in June 2010. 

Although he managed to turn a profit, cashing out with $127 million, Ross was reportedly irritated at not being able to remain in the sector for long and make a bigger profit. As the aviation industry took off in India over the subsequent decade, Ross has continued to blame the heavy-handed approach to the private sector by the government for his early exit, sources at the US Department of Commerce say.

Before this, the investment firm founded by Ross in 2000 had acquired apparel maker OCM India for about $37 million in 2016. The firm was in talks with China’s textile major Shandong Ruyi Technology Group to sell its entire stake, but finally sold to Mumbai-based Donear Group, another textile manufacturer, in late 2017.

Heading one of the most powerful agencies at Washington DC, Ross is the oldest first-time presidential appointee to the Cabinet. His personal Twitter handle describes him as an investor, banker, and art collector — in that order. His self-professed love of investing in troubled companies and using the profits to bankroll downstream investments is more than the art collection he maintains, estimated by Forbes to be upwards of $100 million.

Dubbed the ‘King of Bankruptcy’ by Wall Street, Ross has always focused on buying distressed companies and sharply cutting jobs and salaries to make a profit. US President Donald Trump brought Ross aboard after publicly commending him for turning around steel and coal businesses before 2008. But after the 2008 recession, the investor has been focusing more on banks. As the non-performing asset crisis gripped the Indian banking community three years back, Ross had reportedly been in talks with Indian bankers to assess stressed companies in which creditors are pushing for a change in management.

After being pulled up by US securities watchdog for having potential conflict of interest as commerce secretary, Ross had pledged to sell his stake in WL Ross & Co. that earlier independently managed more than $4.1 billion worth of investments. However, he continues to face a string of serious allegations for securities fraud, embezzlement, and corruption that deem more than $120 million of his estimated $700 million fortune as ill-gotten wealth. Ross doggedly continues to defend himself in all cases, arguing that his investments were complex and self reporting each to the government took time.

Ross’s financial dealings have made him fair game for the Opposition Democratic Party, which has charged him for being ‘part of the rot’ of Wall Street financiers and high-profile company executives with whom Trump has crammed his Cabinet. A case in point: Ross is also mentioned in the infamous Paradise Papers — a global financial database leak that shows where the wealthy and powerful have stashed their cash.

In 2006, Ross sold a controlling stake in his investment management fund to a larger company called Invesco for $100 million. But later, Invesco had to pay $43 million in fines and reimbursements after creditors complained of Ross repeatedly charging inappropriate fees on failing investments and collecting money for serving on corporate boards in violation of his agreement with his investors. Even as the US commerce secretary berated the Indian government for a lack of transparency, the little known fact is that WL Ross & Co. continues to have a subsidiary in Mumbai, with authorised share capital of Rs 3 crore, of which capital is more than Rs 2.3 crore.