Advisers’ holdings are buried in layers of shell companies, creating vast opportunities for conflicts of interest while minimizing transparency.
As President Trump faced a barrage of criticism last summer over the former Wall Street executives and other ultra-wealthy people serving in his administration, he offered a characteristic rationale: The appointees, he suggested, were too rich to have financial conflicts of interest.
“They’re representing the country,” Mr. Trump said in June at a rally in Iowa. “They don’t want the money.”
But a cascade of revelations surrounding his advisers’ business holdings — including news this week that the commerce secretary, Wilbur L. Ross Jr., retained business ties to a Russian oligarch subject to sanctions — has thrust into view an inescapable contradiction between the financial transparency expected in public service and the realities of the modern global rich.
Mr. Trump has assembled the wealthiest cabinet in American history, and also a deeply conflicted one, despite federal rules requiring appointees to relinquish or distance themselves from assets that would conflict with their government responsibilities. Even now, the Trump team has holdings that are spread across myriad industries and hidden from the public behind layers of trusts and shell companies. Some of that secrecy has been washed away in recent months by press reports and by the leak of millions of documents from Appleby, one of the world’s leading offshore law firms.
Mr. Trump’s informal kitchen cabinet likewise includes wealthy investors whose business intersects with the president’s domestic and foreign policy agendas. They include an executive at the private equity giant Blackstone, Stephen A. Schwarzman, whose White House connection helped the company win a $20 billion deal from Saudi Arabia, and Carl C. Icahn, a special adviser on deregulation who resigned in August after pressuring officials on a biofuels rule worth hundreds of millions of dollars to one of his companies.
Mr. Icahn’s conflicting roles are now the subject of an inquiry by federal prosecutors in New York, according to regulatory disclosures filed in recent days by one of Mr. Icahn’s main investment companies.
The potential conflicts extend from the cabinet to the West Wing. Mr. Trump’s son-in-law, Jared Kushner, an adviser whose portfolio ranges from Middle Eastern peace to government technology, revealed over the summer that he had failed to disclose dozens of assets on his initial government ethics forms.
“It is precisely because we have extraordinarily wealthy individuals running the government that we have no way of knowing what the conflicts of interest really are,” said Gary Kalman, executive director of the FACT Coalition, a network of anti-corruption groups. “They use complex structures to hide their money, both domestically and abroad.”
Among the investments Mr. Kushner initially failed to publicly disclose was a real estate technology start-up called Cadre. After beginning his job at the White House, Mr. Kushner identified for ethics officials the assets that he believed he would need to sell in order to avoid conflicts, including investments in a group of funds that hold stakes in various technology companies. Like other appointees, Mr. Kushner sought a certification that would let him defer capital gains taxes on those assets.
Virginia Canter, a former White Ethics lawyer now at Citizens for Responsibility and Ethics in Washington, a left-leaning watchdog group, said that officials were typically required to sell off all similar assets in order to win the tax benefit. But Mr. Kushner did not include Cadre among the investments to be sold. Instead, he moved his Cadre stake into a holding company, BFPS Ventures, that his disclosure form described as containing only “real estate in New York.”
Mr. Kushner’s team has maintained that the original omission was accidental, but that Kushner is entitled to keep his Cadre stake because he could easily recuse himself from any conflicts surrounding the company.
“Mr. Kushner’s interest in Cadre was disclosed to and discussed with the Office of Government Ethics prior to inauguration and is addressed in his ethics agreement with the White House,” Jamie S. Gorelick, a lawyer for Mr. Kushner, said in a statement.
But Ms. Canter said it wasn’t clear whether ethics officials were given complete information about Cadre before granting Mr. Kushner the tax deferral on his other assets, and she questioned his decision to keep it.
“The nature of the entity is that real estate is being bought and sold on a technology platform,” Ms. Canter said. “Who is buying and selling on that platform — we have no visibility into it.”
She added, “There should have been much greater scrutiny.”
Mr. Trump’s wealthy appointees have divested from a broad range of assets, and in some cases have made clean breaks: Rex W. Tillerson, the former Exxon Mobil chief, shed a small fortune in company shares to become secretary of state.
But some appointees, like Mr. Ross, have taken advantage of the ambiguities of current rules to retain assets that could be impacted by administration policy. Under her agreement with ethics officials, for example, Betsy DeVos, the billionaire education secretary, divested a swath of assets. But she retained many others in family trusts of which she remains a trustee. There is no way to know which of those assets may conflict with her duties as secretary of education: Ms. DeVos chose not to publicly disclose what investments are contained in two of them.
“What we are seeing in these new leaks is that even when people are acting in a legal fashion, the laws allow them to cover the tracks of things they think would be embarrassing or problematic,” Mr. Kalman said.
Mr. Ross’s Russia ties are a case study in how layers of offshore secrecy can hide potential conflicts. Before Mr. Trump named him to the Commerce Department, Mr. Ross was a major shareholder in a shipping firm that did brisk business transporting gas for a Russian company, Sibur, whose owners include not only an oligarch hit with sanctions but the son-in-law of Russian President Vladimir V. Putin.
Navigator was listed on an initial disclosure filed by Mr. Ross that covered his holdings through the end of last year. But an ethics and divestment agreement he filed in January, which listed assets he intended to keep, did not mention Navigator, leaving unclear whether he had sold it.
Senator Richard Blumenthal, a Connecticut Democrat, said he had voted to advance Mr. Ross’s nomination out of the Committee on Commerce, Science and Transportation, of which he is a member, because Mr. Ross had pledged to divest any assets that would pose a conflict.
Unbeknownst to Mr. Blumenthal, Mr. Ross in fact retained much of his stake in Navigator after taking office. But it was hidden within one of the disclosed partnerships, behind layers of shell companies in the Cayman Islands. In an interview with Bloomberg News on Monday, Mr. Ross said that he would probably sell his stake in the company.
James Rockas, a spokesman for Mr. Ross, noted that Mr. Ross’s decision to retain the Navigator investment had been approved by the government ethics office.
But Mr. Blumenthal now says he felt misled. This week, he called for a review of Mr. Ross’s financial conflicts by the Commerce Department’s inspector general.
“The complexity and lack of transparency of Cayman Islands-based holding companies made them very much like a Russian nesting doll,” Mr. Blumenthal said. “If we knew then what we know now, it would have been a very, very different confirmation process.”