The U.S. Treasury has fined ExxonMobil $2 million for violating sanctions against Russia issued over the Kremlin’s aggression towards Ukraine, saying that the company caused “significant harm” to the U.S. sanctions program.
The violations – which involved eight contracts signed with Rosneft Chief Igor Sechin over “oil and gas projects” – occurred in May 2014, when current Secretary of State Rex Tillerson was CEO of the multinational oil and gas conglomerate.
“ExxonMobil’s senior-most executives knew of Sechin’s status as a (person under sanctions) when they dealt in the blocked services of Sechin,” the U.S. Treasury’s Office of Foreign Assets Control wrote in an enforcement order published on July 20.
A State Department spokesperson referred the Kyiv Post to a daily press briefing scheduled for later in the day.
ExxonMobil issued a press release, accusing OFAC of “trying to retroactively enforce a new interpretation” of the sanctions.
‘Reckless disregard’
The Treasury’s sanctions enforcement arm does not name the ExxonMobil officials who signed the contracts with Sechin, but says that they were “presidents of its U.S. subsidiaries.” The deals occurred from May 14 to May 23, according to the enforcement order.
The regulator says that the contracts were concluded specifically with Sechin, who was sanctioned on March 20, 2014 for stoking conflict in Ukraine. The sanctions encompass a travel ban and a freeze of all of Sechin’s assets held in the United States, and also forbid any U.S. companies and people from doing business with him.
OFAC writes that ExxonMobil lawyers attempted to argue that the deals fell under a distinction between “professional” and “personal” interactions. In the company’s press release, ExxonMobil admits that it “signed documents involving ongoing oil and gas activities in Russia with Rosneft,” but that since it was Rosneft’s business – and not Sechin’s personally – the transactions were legal.
Rosneft itself has not been sanctioned by the U.S. government.
But this failed to sway the Treasury’s regulators, who repeatedly wrote that the violations were preceded by weeks of public announcements and clarifications on the topic.
“ExxonMobil demonstrated reckless disregard for U.S. sanctions requirements when it failed to consider warning signs” related to dealing with Sechin, regulators write in the document.
Rosneft partnership
ExxonMobil applied for – and, in some cases, received – waivers that allow companies to make payments otherwise prohibited by the sanctions regime from the U.S. Treasury at the same time that these violations allegedly took place. Those license requests were connected to a joint venture between ExxonMobil and Rosneft to explore a massive oil deposit in Russia’s Kara Sea.
In September 2014, news website Quartz reported that the Treasury granted ExxonMobil exemption from sanctions in order to wind down the deal.
The enforcement action follows months of controversy regarding close ties between the Trump Administration and the Russian political and business elite. The controversy – combined with President Trump’s campaign statements regarding rolling back the sanctions – fueled widespread speculation that his policy would be oriented against Ukraine.
So far, however, President Trump has continued the Obama Administration’s sanctions policy towards Russia.
The move, which indicates civil wrongdoing but not criminal, also comes amid years of criticism that U.S. law enforcement fails to prosecute corporate wrongdoing.
In this case, the wrongdoing would appear to subvert the U.S. government’s foreign policy – an area now administered by the former CEO of ExxonMobil.
