Treasury says senior-most executives were aware of sanctions in 2014 over Crimea annexation when firm signed deals with Russian oil tycoon Igor Sechin
ExxonMobil presented reckless neglect in violating Russian sanctions while Rex Tillerson was the oil companys CEO, the treasury department said on Thursday.
The treasury fined Exxon$ 2m for violating sanctions that the Obama administration imposed on Russian entities in 2014 over Russias annexation of Crimea. And it said the companys senior-most executives were aware of international sanctions when two of its subsidiaries signed deals with the Russian oil tycoon Igor Sechin. Sechin is the chairman of the Russian oil giant Rosneft and is on a US blacklist that bars Americans from doing business with him.
In a statement, Exxon countered that it had done nothing incorrect and complained that the fine was fundamentally unfair. The state department declined to comment on Tillersons role, referring all questions to Exxon.
Treasurys office of foreign assets control( Ofac) said Exxon caused significant harm to the sanctions program by engaging in transactions with a person who is an official of the government of the Russian Federation contributing to the crisis in Ukraine.
Ofac said it had considered and repudiated Exxons explanation that it had believed from press accounts of the sanctions that there was a distinction between Sechin acting in a professional rather than a personal capability. It also determined that Exxon had not voluntarily disclosed the violations, which it said was an egregious example. It leveled the statutory maximum civil penalty of$ 2m for the breaches.
In its statement, Exxon maintained its innocence, indicated that it had followed clear guidance from the White House and treasury department when it went ahead with the deals with Rosneft that Sechin then countersigned. It noted that Rosneft had not been subject to sanctions at the time and maintained it understood transactions with Sechin in his personal capacity as an individual were not covered.
Based on the enforcement info published today, Ofac is trying to retroactively enforce a new interpreting of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today, it said. Ofacs action is fundamentally unfair.
Ofac said it considered several aggravating factors when reaching its decision. Those included reckless disregard for US sanctions requirements when it failed to consider warning signs links with dealing in the blocked services of( a sanctioned person ); that Exxon Mobils senior-most executives knew of Sechins status … when they dealt in the blocked services of Sechin; that the bargains caused significant harm to the Ukraine-related sanctions program objectives; and that the company is a sophisticated and experienced oil and gas company that has global operations and routinely deals in goods, services and technology subject to US economic sanctions and US export controls.
Tillerson has taken a tough line with Ukraine-related sanctions as secretary of state, saying earlier this month on a trip to Kiev that international sanctions would not be lifted until Russia met its obligations.
But while he was at Exxon, Tillerson opposed the sanctions levied on Moscow for its annexation of Crimea. Those sanctions expensed his company hundreds of millions of dollars.
The same year that Exxon is accused of breaching international sanctions, Tillerson was unambiguous about his opposition to the penalties.
We do not support sanctions, generally, because we dont find them to be effective unless they are very well implemented comprehensibly and thats a very hard thing to do, Tillerson said at Exxons 2014 annual meeting.
Sechin was Tillersons main partner in Exxons bid to drill in the Arctics Kara sea, with its vast untapped potential. Tillerson knew both Sechin and the Russian president, Vladimir Putin, for more than a decade before he became secretary of state.
After the Ukraine-related sanctions put in place under Barack Obama, Tillerson find Exxons stake in a lucrative offshore drilling project with Rosneft come under threat. Tillerson visited the White House numerous days as CEO to protest the sanctions, but they remained in place.
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