US Fines Exxon For Violating Russia Sanctions Under Tillerson

The U.S. Treasury Department imposed a $2 million fine on Exxon Mobil Corp. for violating sanctions on Russian Federation while Secretary of State Rex Tillerson was the oil giant's chief executive.

Between May 14 and May 23, 2014, top U.S. -based ExxonMobil executives signed eight documents with Igor Sechin, the head of state-run Rosneft, the U.S. Treasury's Office of Foreign Assets Control (OFAC) said in a statement on its website. Tillerson knew both Sechin and Russian President Vladimir Putin for more than a decade before he became secretary of state.

ExxonMobil had "demonstrated reckless disregard for US sanctions requirements" by signing the deals with Sechin just weeks after the United States blacklisted him, OFAC said in an unusually lengthy three-page statement laying out its reasoning. Treasury officials said the executive orders made no such distinction. The U.S. blacklisted Sechin, Tillerson's longtime business associate, as part of its response to Moscow's actions in Ukraine and annexation of Crimea.

In April, the Treasury Department denied Exxon permission to bypass sanctions to drill for oil in Russian Federation.

Treasury had instituted the sanctions against Sechin on April 28, 2014, when it said "transactions by USA persons or within the United States involving the individuals and entities designated today are generally prohibited". State Department spokeswoman Heather Nauert told reporters on Thursday that the agency was alerted to the fine on Wednesday. Those blacklisted included Vyacheslav Volodin, Putin's chief of staff; Dmitry Kozak, a deputy prime minister; and a guy named Igor Sechin, the president of state-owned petroleum company Rosneft. Foreign Policy magazine reported "Sechin's personal assets will be frozen, but Treasury officials said the designation wouldn't impact US companies' ability to do business with Rosneft because Sechin does not control the firm".

Exxon has maintained its innocence, saying in a statement that it "followed clear guidance" from the White House and Treasury Department when it did the deals with Rosneft, adding that Rosneft was not subject to sanctions at the time.

OFAC said it considered several aggravating factors when reaching its decision.

Exxon, in its lawsuit, noted that the former Obama administration had said the sanctions strategy was to target individuals like Sechin who were contributing to the Ukraine crisis — not the companies they might manage on Russia's behalf.

"You could have Sechin standing over the guy's shoulder", said Mortlock, now an attorney at Willkie Farr & Gallagher LLP in Washington. The company was allowed to finish drilling a well in the Russian Arctic in the fall of 2014 but could not produce oil.

The US imposed sanctions against Russian Federation amid rising tension in Ukraine.