U.S. Fines Exxon $2 Million Over Russia Sanctions Breaches -- Update
July 20 2017 - 3:17PM
Dow Jones News
By Samuel Rubenfeld, Lynn Cook and Ian Talley
WASHINGTON -- The U.S. Treasury Department Tuesday imposed a $2
million fine on Exxon Mobil Corp. for what it called a "reckless
disregard" of U.S. sanctions on Russia while Secretary of State Rex
Tillerson was the oil giant's chief executive. The company
immediately said it would challenge the finding.
Exxon, under Mr. Tillerson's helm, in early 2014 deepened the
company's long-standing partnership with the Kremlin despite
Washington levying fresh sanctions against Russia for seizing
territory in eastern Ukraine. In May of that year, Treasury said
the company signed eight documents relating to oil and gas projects
in Russia that were also signed by Igor Sechin, chief executive of
the state oil giant PAO Rosneft. Treasury said Thursday those deals
were violations of U.S. sanctions against Mr. Sechin, a former
Russian intelligence officer and top ally to President Vladimir
Putin.
Mr. Tillerson, who has close ties to Russia and received an
"Order of Friendship" award from Moscow, left Exxon last year to
become U.S. Secretary of State. The $2 million fine, Treasury said,
was the maximum amount it could levy against the company.
A spokesman for Exxon called the fine "outrageous" and said
Treasury's findings are a 180-degree turn from previous guidance
handed down by the Obama Administration at the time the sanctions
were enacted.
Exxon doesn't have any direct deals with Igor Sechin, but does
have business dealings with Rosneft, where Mr. Sechin in his
capacity as CEO signed company documents, Exxon said. Under
President Barack Obama, the White House and Treasury in 2014 said
that U.S. companies were allowed to participate in business
dealings with Mr. Sechin if they were professional, not personal,
according to Exxon.
The Office of Foreign Assets Control "seeks to retroactively
enforce a new interpretation 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," Exxon said in a filing filed in
U.S. District Court in the Northern District of Texas.
When Mr. Tillerson took his position in President Trump's
cabinet he promised to recuse himself from matters involving Exxon
for one year. He hasn't spoken out expressly against the sanctions
since taking office.
The company showed "reckless disregard for U.S. sanctions
requirements" when failing to consider the warning signs associated
with dealing in the blocked services of someone under U.S.
sanctions, the U.S. Treasury said in an enforcement notice.
The State Department referred questions to Exxon.
Rosneft spokesman Michael Leontiev told The Wall Street Journal
in an email, "I am sure that while Exxon was preparing the decision
about documents signing it consulted with both OFAC and lawyers
specialized on sanctions very carefully." Mr. Leontiev said that
signing an agreement with Mr. Sechin not as an individual, but as a
representative of Rosneft management, can't be the foundation for a
sanctions violation.
The penalty, issued by Treasury's sanctions unit, the Office of
Foreign Assets Control, comes as committees in the Senate and House
of Representatives, as well as a Justice Department special
prosecutor, investigate what U.S. intelligence agencies say was a
Kremlin-backed campaign to interfere in the presidential election,
and whether there was any collusion between the Trump campaign and
Russia. President Donald Trump has denied any collusion. Russia has
denied meddling.
"ExxonMobil caused significant harm to the Ukraine-related
sanctions program objectives by engaging the services" of a
sanctioned entity, Treasury said.
Exxon and other big energy companies recently joined President
Trump in voicing concerns about Congressional efforts to toughen
sanctions on Russia, arguing that it could shut down oil and gas
projects around the world that involve Russian partners. Exxon
unsuccessfully sought a sanctions waiver from the administration on
at least one Russian deal.
Lobbyists for Exxon told lawmakers that several provisions in
the sanctions legislation under consideration on Capitol Hill are
worrisome, including measures to prohibit partnerships with Russian
individuals. Companies have also voiced concern that the bill could
force them to disclose information they consider proprietary.
Write to Lynn Cook at lynn.cook@wsj.com and Ian Talley at
ian.talley@wsj.com
(END) Dow Jones Newswires
July 20, 2017 16:02 ET (20:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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