United States fines ExxonMobil $2M for violating Russian sanctions

United States fines ExxonMobil $2M for violating Russian sanctions

United States fines ExxonMobil $2M for violating Russian sanctions

According to a penalty filed today by the Treasury Department, the presidents of Exxon's US subsidiaries in 2014 signed eight agreements for oil and gas projects with Igor Sechin, the president of Russian state-owned oil company Rosneft and a close ally of Vladimir Putin. The sanctions prohibit any business dealings with those listed. Treasury officials said the executive orders made no such distinction.

"Exxon Mobil followed the clear guidance from the White House and Treasury Department when its representatives signed documents involving ongoing oil and gas activities in Russian Federation with Rosneft - a nonblocked entity - that were countersigned on behalf of Rosneft by CEO Igor Sechin in his official representative capacity", said William Holbrook, a company spokesman. The company said the eight legal documents it signed were related to ventures with Rosneft, not Sechin personally.

The documents, which Treasury said Exxon Mobil failed to "voluntarily self-disclose", were related to oil and gas projects in Russian Federation.

By dealing with Sechin, the company "caused significant harm" to US sanctions on Russian Federation, the Treasury said.

"The secretary continues to abide by his ethical commitments, including that recusal from Exxon-related commitments", said State Department spokeswoman Heather Nauert. The company pointed out that a Treasury Department spokesman had even said it would be permissible for an American CEO to attend a Rosneft board meeting with Sechin as long as it wasn't related to Sechin's "personal business". "No materials issued by the White House or the Department of the Treasury asserted an exception or carve-out for the professional conduct of designated or blocked persons, nor did any materials suggest that USA persons could continue to conduct or engage in business with such individuals".

"Based on the enforcement information published today, Ofac is trying 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", it said.

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But the Treasury Department said "ExxonMobil demonstrated reckless disregard for" the sanctions. "OFAC's action is fundamentally unfair", Exxon said.

President Barack Obama signed an executive order in March 2014 targeting those involved in an escalating conflict along the Russia-Ukraine border, including Russia's annexation of Crimea. "But the problem here is that it was signed by Sechin himself".

During that time, current Secretary of State Rex Tillerson was still Exxon's CEO.

The deal came at a time when other oil companies, including BP and Total SA, were clamoring to enter Russian Federation, aiming to tap its vast oil and natural gas reserves.

On a trip to Kiev earlier this month, he said the sanctions would not be lifted until Russian Federation met its obligations.