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Exxon fined over disregard for Russia sanctions

July 20, 2017

Exxon Mobil Corp showed "reckless disregard" for US sanctions on Russia when Secretary of State Rex Tillerson was the oil giant's CEO. The Treasury Department fined the firm $2 million, but the stigma persists.

Russland Putin und Tillerson 2011
Image: picture alliance/dpa/Alexey Druginyn Mandatory Credit/R. Novosti

The US Office of Foreign Assets Control (OFAC) - which administers and enforces economic and trade sanctions - said in a statement on Thursday that Exxon had caused "significant harm" to the US' Russian sanctions program by engaging in transactions with a Russian government official.

Exxon violated sanctions - it said - when it signed contracts in May 2014 with Russian oil magnate Igor Sechin, chairman of the government-owned energy giant Rosneft. 

Oil giant knew of embargo

Exxon's "senior-most executives" knew Sechin was blacklisted when two of its subsidiaries signed deals with him, the Treasury said.

Lavrov labels new US sanctions 'Russophobia'

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After the US imposed Ukraine-related sanctions under President Barack Obama in 2014, Tillerson - then the company's chief executive - saw Exxon's stake in an offshore drilling project with Rosneft under threat.

In May 2014, Neil Duffin, president of subsidiary Exxon Mobil Development, signed several deals to continue the company's work on the Sakhalin oil and natural gas project on Russia's eastern coast.

The US blacklisted Sechin as part of its response to Moscow's actions in Ukraine and annexation of Crimea. 

Tillerson stepped down as chief executive of Exxon in 2016 to serve as the Trump administration's secretary of state.

Happy days: Rex W. Tillerson, then Chairman and CEO of ExxonMobilImage: picture-alliance/dpa/R. Curry

The dispute stems from a disagreement about whether the sanctions differentiated between "professional" and "personal" interactions with Sechin.

The Treasury Department argued that the government never gave Exxon or anyone else a reason to believe there was an exception for professional dealings.

Exxon, in a statement, said it had done nothing wrong and complained that the fine was unfair. 

The company said in a statement it received "clear guidance" from the White House and Treasury Department that participating in a board meeting with Sechin would not constitute a violation so long as the meeting did not concern Sechin's personal business but instead operations of Rosneft, which was not blacklisted.

A question of sanctions

The same month that Exxon signed the deals,  May 2014, Tillerson said the company opposed sanctions and found them "ineffective."

"We do not support sanctions, generally, because we don't find them to be effective unless they are very well implemented comprehensibly and that's a very hard thing to do," Tillerson said at Exxon's 2014 annual meeting.

Today, Tillerson says sanctions will stay in place until Russia reverses course in Ukraine and gives back Crimea.

jbh/mm (AP, dpa, AFP)

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