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Exxon fined for Tillerson-era breach of Russia sanctions

Published:Thursday | July 20, 2017 | 12:00 AM
US Secretary of State and former Exxon CEO Rex Tillerson. (AP Photo/Jon Gambrell, File)

Exxon Mobil Corp showed "reckless disregard" for United States sanctions on Russia while Secretary of State Rex Tillerson was the oil giant's CEO, the Treasury Department said Thursday.

The US fined the company US$2 million.

Treasury said that Exxon violated sanctions when it signed contracts in May 2014 with Russian oil magnate Igor Sechin, chairman of government-owned energy giant Rosneft. The US blacklisted Sechin, Tillerson's longtime business associate, as part of its response to Moscow's actions in Ukraine and annexation of Crimea.

The same month that Exxon signed the deals, Tillerson said the company generally opposes sanctions and finds them "ineffective".

As America's top diplomat, Tillerson has insisted the sanctions will stay in place until Russia reverses course in Ukraine and gives back Crimea. Still, the sanctions breach on his watch raises significant questions about his ability to credibly enforce the sanctions and to persuade European countries to keep doing so.

Exxon, in a statement, countered that it had done nothing wrong and complained that the fine was unfair. The State Department wouldn't comment on Tillerson's role.

Yet, the Treasury Department said that Exxon's "senior-most executives" knew Sechin was blacklisted when two of its subsidiaries signed deals with him. The Office of Foreign Assets Control, or OFAC, said Exxon caused "significant harm" to the sanctions programme by engaging in transactions with a Russian government official contributing to the Ukraine crisis.

The dispute between Exxon and the government stems from a disagreement about whether the sanctions differentiated between "professional" and "personal" interactions with Sechin, who had been blacklisted only weeks earlier.

Maintaining its innocence, Exxon said that "clear guidance" from the White House and Treasury Department had indicated that only engaging with Sechin in a personal capacity was prohibited. It noted that Rosneft was not subject to sanctions at the time.

Not so, said the Treasury Department, arguing that the government never gave Exxon or anyone else a reason to believe there was an exception for professional dealings. The government noted that its website at the time explicitly warned companies not to enter into any contracts signed by people on the blacklist.

The US said that the presidents of two Exxon's subsidiaries and Sechin had signed eight legal documents in May 2014. That same month, Neil Duffin, president of subsidiary Exxon Mobil Development, signed several deals to continue their work on the massive Sakhalin oil and natural gas project on Russia's eastern coast.

- AP